Posted on May 19th, 2008 in Mr Mortgage's Personal Opinions/Research
My family and I were retuning from the lower Sierra Nevada foothills today after enjoying a beautiful weekend at our favorite lake. The water was great, skiing wonderful and fishing fantastic. We didn’t want to leave…it was one of ‘those’ weekends.
On the way home, I stopped at the local Chevron to fill up, as I have done dozens of times in the past. I pull up to the pump, swipe my card and quickly jump back into the truck while the innocent looking device rips into my wallet like a beaver does a tree limb.
I sit back inside the car and watch the truck’s gas gauge rise, as I hear the pump in the background clunking along. I actually counted the clunks…every 18 times it made that sound, it cost me $7.22. Then, to my surprise the pump clunks and all noise stops much sooner than I expected.
Hey, but the 25 gallon tank on my GMC DuraMax diesel truck was just over 3/4 full! I figured my debit card gas authorization limit, set by the gas station, had been reached so I got out of the car to re-swipe and complete the fill-up.
I looked at the pump and sure enough, I was correct. The authorization limit had been reached alright…BUT AT $100 FREAKING DOLLARS! I looked again in amazement, then told my wife to check it out. I grabbed my camera and snapped the photo below. As you can see in the photo below, I only used a little more than 20 gallons of diesel. This very same fill-up cost around $80 just two weeks ago. And this a fairly large Chevron on a well-traveled highway, near Sacramento. Not some one-pump repair shop in the sticks!
“Thank you Mr Bernanke is all that I could say.” Who else is there at which to point the finger?
We can talk about Asian and Indian growth, weak refining capacity in the US and geopolitical risk premiums all day long, but I am rate of change kind of guy. The massive rate of change in crude and gas prices are perfectly in-line with the dramatic cut in the Fed Funds Rate, weakening dollar etc. Some will say we have artificially low prices for years and now are catching up to reality. Perhaps, but again the rate of change over such a short period of time is what is significant to me and likely most consumers.
To this mortgage insider and Wall Street outsider the following are what I have noticed have had the biggest rate of change since Bernanke started to ratchet down rates at the fastest pace in history after spending months in 2007, along with Hank Paulsen, denying the problem even existed.
-crude oil and gasoline rising
-food costs rising
-mortgage loan, credit card and auto loan defaults rising
-banks Level 2 ‘assets’, Level 3 ‘assets’ and leverage rising
-stock holder equity shrinking
-the Fed’s balance sheet shrinking
-mortgage rates rising
-home values falling
and finally, since the last shock and awe move on the day Bear Stearns collapsed…-stock prices rising of the very same handful of banks who invented the recent manifestation of structured finance that has blown up in the world’s face and that are now being rallied around by the financial press and Wall Street.
On the surface it sure looks like 300 million Americans and God knows how many billions of people globally, have been thrown under the bus to save a handful of alchemist banks who got us into this mess in the first place.
After seeing the $100 price tag for a partial fill, I actually joked about calling AAA, as whatever cost I incurred over the free towing that comes with my premium subscription maybe cheaper than the next fill-up.
Perhaps $5 is not that shocking to some, but it sure caught my attention. Different folks will have different price trigger points but I think that the $5 price tag is psychologically significant. I spent the next hour after filling up talking about how what we need to do to reduce our personal gas consumption. -Best, Mr Mortgage
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