3 Investments that Benefit from the US Oil Rebound
Published in Agora
(France) on 10 February 2015
by Philippe Béchade (link to original)
(France) on 10 February 2015
by Philippe Béchade (link to original)
Translated from
by Michael Krimian.
Edited by Nathan Moseley.
Every economist, every strategist, every CEO hammers it: The U.S. is firmly locked on the track to growth. Wealth and the job engine are not far from performing at optimal capacity. On what dwells such rhetoric? The kind which is characterized by an optimism resembling wishful thinking? On the 250,000 new jobs created each month? Such a phenomenal number that, keeping at this pace, the return of full employment — an average unemployment rate of 5 percent — will be achieved by the end of 2015.
Well, 3 million jobs created per year; now that’s an impressive number: except that the natural population growth in America is 0.75 percent per year — that is, an addition of 3.2 million people, not including undocumented workers.
In other words, if retirement departures were not as high, if 11 million of the long-term unemployed and discouraged job seekers had not disappeared, erased by a click of the mouse, from official statistics since 2009, the chart would be much different.
But come on ... Official numbers attest to the creation of 10 million jobs since 2010, which cuts the number of those unemployed by half. If it were false, it would not go unnoticed!
The worst blind man is the one that does not want to see. The American population is extremely passive against neoliberal propaganda, which is backed by Wall Street and the media; the population is under the control of the 1 percent, whose interests reside in tricking the 99 percent who do not belong to the uber-elite.
An Uncontestable Number
We will not debate the veracity of official numbers by meticulously studying the calculation method, the “adjustments,” and other tortuous means statisticians utilize. There is a more efficient and fool-proof way to unmask the institutionalized official lie.
One figure that is essential for this is indisputable because it is difficult to manipulate: the participation rate of the active population. At the end of December, it fell to its lowest point since 1978, under 63 percent, before a symbolic rebound in January.
1970 is far back; nevertheless, let’s take the year 2000 as a reference: The rate was 67.4 percent by the end of December 1999 and was 66.2 percent in January 2008, before the financial meltdown.
There is worse: The official figures from the Bureau of Labor Statistics tell us that the rate of Americans being employed — that is, salaried as artisan, merchant, farmer, etc. — fell from 63.3 percent in mid-2007 to 58.3 percent in 2010; and it has not rebounded since.
It means that 102 million Americans who could work full or part time — not to mention the precarious jobs — are outside of the job market.
It is a staggering figure. The chart is even more appalling when we know that a quarter of American employees live under the poverty line: Their income is not enough to live, even precariously, in a mobile home with a second-hand car that is worth less than $1,000. In total, this represents 52 million people: in other words, more than the Spanish population, which is 47 million, or 75 percent of the French population, which is about 66 million.
Which Sectors Benefit the Most from This Rebound?
Nevertheless, for argument’s sake, let’s believe in the official figures that advocate the full-blown return of growth for a few minutes. The examination will reside on the nature of these new jobs and the incomes associated.
Without surprise, concerning the last two months of 2014, the distribution and catering sectors have recruited the greatest number of jobs; the two have a common thread: the lowest income level in the U.S. In fact, wait staff are partly remunerated in tips.
Hardly more surprising, the 40 percent drop in oil price was followed by massive recruitments in the transportation sector, with a predilection for heavy-duty drivers — the famous 18 wheels and 30 tons.
It’s no secret that in order to earn a good living, one has to work days and nights: The greater the number of days in the month the better; this is not ideal for a family life.
Until the end of the first quarter of 2014, the highest recruiting sector was the shale oil business, inducing a natural overlap with the transport of crude and refined oil by means of road or rail. This resulted in a record amount of traffic on rails between the production centers localized in the north and the refineries mainly in the south of the country.
In order to fully comprehend what represents the transportation sector in the USA, here is a link showing the most common job by state.
It's staggering. Let’s examine now the impact of the tremendously favorable, spectacular fall in the price of a barrel of oil over the last six months.
A gallon of gasoline went from an average of $3.90 (and even more than $4 in California, as I witnessed last August when I visited) to $2.10. In these conditions, the big surprise, from our European point of view, one that desires to reduce our carbon footprint, is the increase by 6.3 percent of the volume of gasoline sold only in January 2015, compared to 2014 at the same time. The quantity of consumed gasoline amounts to over 3 billion gallons. That is equal to the highest level ever measured, which came in the summer 2007; but it is winter this time.
The average price of gasoline and diesel fell by 37 percent in the last six months, but the turnover of gas stations has only dropped by 25 percent.
What Does the Automobile Sector Say?
With gasoline being less costly, Americans are driving more frequently. They abandon walking and public transportation, free themselves from constrained economic driving ... and vroom!
The proof? The sales of SUVs with heavy-duty engines have exploded by 42 percent in January and 33 percent last year. Simultaneously, Hummers, with their boat-like oil consumption, have come back into fashion.
As a result, despite the advances in technology to reduce the consumption of personal-use vehicles — those which get below 47 miles per gallon — and the over-representation of four-wheel drive and muscles cars (you know these energy profligate machines, with extra-large wheels and 6-foot long hoods), the average consumption of miles per gallon is back to the level measured in 1980, before the second oil crisis.
With shale oil and propaganda aimed at convincing people of the imminent U.S. energy independence, Americans are falling back into their old habits of the past generations — outside the oil crisis mindset — when they had the feeling that oil would be infinitely available in unlimited quantity ... and that it would be quasi-free.
The only consolation is the carbon emission drop due to catalytic converters. Otherwise, the money saved on a full tank of gas is converted into a full tank and a half ... and that’s hardly an overstatement.
The rest of the money saved ... well, according to the most recent data given by U.S. banks, a third is spent, another third is used to pay off debts, and the last third is saved.
In other words, the money from oil should not be expected to boost consumption and services in 2015.
The only ones who profit are car manufacturers that have bet on luxury models — six to eight cylinders — with F1 or tractor-like wheels. Also, gas stations profit from the increased frequency of clients filling their tanks because they can sell more coffees and cold drinks.
An entire ecosystem based on over-consumption and excess ... but such habits no longer hold up in the financial market. I can still redirect you to three investment niches.
Car washes (it’s not easy to make large-wheeled rims shine without taking the five-star program with high pressure jets and a polished finish); automobile tools capable of molding 31-gallon tanks and more; and finally, XXL wheel manufacturers or heavy-duty truck wheel manufacturers (the 18-wheelers aforementioned). The replacement market is ready with the spectacular extension of distances covered by all types of vehicles on American soil.
Well, 3 million jobs created per year; now that’s an impressive number: except that the natural population growth in America is 0.75 percent per year — that is, an addition of 3.2 million people, not including undocumented workers.
In other words, if retirement departures were not as high, if 11 million of the long-term unemployed and discouraged job seekers had not disappeared, erased by a click of the mouse, from official statistics since 2009, the chart would be much different.
But come on ... Official numbers attest to the creation of 10 million jobs since 2010, which cuts the number of those unemployed by half. If it were false, it would not go unnoticed!
The worst blind man is the one that does not want to see. The American population is extremely passive against neoliberal propaganda, which is backed by Wall Street and the media; the population is under the control of the 1 percent, whose interests reside in tricking the 99 percent who do not belong to the uber-elite.
An Uncontestable Number
We will not debate the veracity of official numbers by meticulously studying the calculation method, the “adjustments,” and other tortuous means statisticians utilize. There is a more efficient and fool-proof way to unmask the institutionalized official lie.
One figure that is essential for this is indisputable because it is difficult to manipulate: the participation rate of the active population. At the end of December, it fell to its lowest point since 1978, under 63 percent, before a symbolic rebound in January.
1970 is far back; nevertheless, let’s take the year 2000 as a reference: The rate was 67.4 percent by the end of December 1999 and was 66.2 percent in January 2008, before the financial meltdown.
There is worse: The official figures from the Bureau of Labor Statistics tell us that the rate of Americans being employed — that is, salaried as artisan, merchant, farmer, etc. — fell from 63.3 percent in mid-2007 to 58.3 percent in 2010; and it has not rebounded since.
It means that 102 million Americans who could work full or part time — not to mention the precarious jobs — are outside of the job market.
It is a staggering figure. The chart is even more appalling when we know that a quarter of American employees live under the poverty line: Their income is not enough to live, even precariously, in a mobile home with a second-hand car that is worth less than $1,000. In total, this represents 52 million people: in other words, more than the Spanish population, which is 47 million, or 75 percent of the French population, which is about 66 million.
Which Sectors Benefit the Most from This Rebound?
Nevertheless, for argument’s sake, let’s believe in the official figures that advocate the full-blown return of growth for a few minutes. The examination will reside on the nature of these new jobs and the incomes associated.
Without surprise, concerning the last two months of 2014, the distribution and catering sectors have recruited the greatest number of jobs; the two have a common thread: the lowest income level in the U.S. In fact, wait staff are partly remunerated in tips.
Hardly more surprising, the 40 percent drop in oil price was followed by massive recruitments in the transportation sector, with a predilection for heavy-duty drivers — the famous 18 wheels and 30 tons.
It’s no secret that in order to earn a good living, one has to work days and nights: The greater the number of days in the month the better; this is not ideal for a family life.
Until the end of the first quarter of 2014, the highest recruiting sector was the shale oil business, inducing a natural overlap with the transport of crude and refined oil by means of road or rail. This resulted in a record amount of traffic on rails between the production centers localized in the north and the refineries mainly in the south of the country.
In order to fully comprehend what represents the transportation sector in the USA, here is a link showing the most common job by state.
It's staggering. Let’s examine now the impact of the tremendously favorable, spectacular fall in the price of a barrel of oil over the last six months.
A gallon of gasoline went from an average of $3.90 (and even more than $4 in California, as I witnessed last August when I visited) to $2.10. In these conditions, the big surprise, from our European point of view, one that desires to reduce our carbon footprint, is the increase by 6.3 percent of the volume of gasoline sold only in January 2015, compared to 2014 at the same time. The quantity of consumed gasoline amounts to over 3 billion gallons. That is equal to the highest level ever measured, which came in the summer 2007; but it is winter this time.
The average price of gasoline and diesel fell by 37 percent in the last six months, but the turnover of gas stations has only dropped by 25 percent.
What Does the Automobile Sector Say?
With gasoline being less costly, Americans are driving more frequently. They abandon walking and public transportation, free themselves from constrained economic driving ... and vroom!
The proof? The sales of SUVs with heavy-duty engines have exploded by 42 percent in January and 33 percent last year. Simultaneously, Hummers, with their boat-like oil consumption, have come back into fashion.
As a result, despite the advances in technology to reduce the consumption of personal-use vehicles — those which get below 47 miles per gallon — and the over-representation of four-wheel drive and muscles cars (you know these energy profligate machines, with extra-large wheels and 6-foot long hoods), the average consumption of miles per gallon is back to the level measured in 1980, before the second oil crisis.
With shale oil and propaganda aimed at convincing people of the imminent U.S. energy independence, Americans are falling back into their old habits of the past generations — outside the oil crisis mindset — when they had the feeling that oil would be infinitely available in unlimited quantity ... and that it would be quasi-free.
The only consolation is the carbon emission drop due to catalytic converters. Otherwise, the money saved on a full tank of gas is converted into a full tank and a half ... and that’s hardly an overstatement.
The rest of the money saved ... well, according to the most recent data given by U.S. banks, a third is spent, another third is used to pay off debts, and the last third is saved.
In other words, the money from oil should not be expected to boost consumption and services in 2015.
The only ones who profit are car manufacturers that have bet on luxury models — six to eight cylinders — with F1 or tractor-like wheels. Also, gas stations profit from the increased frequency of clients filling their tanks because they can sell more coffees and cold drinks.
An entire ecosystem based on over-consumption and excess ... but such habits no longer hold up in the financial market. I can still redirect you to three investment niches.
Car washes (it’s not easy to make large-wheeled rims shine without taking the five-star program with high pressure jets and a polished finish); automobile tools capable of molding 31-gallon tanks and more; and finally, XXL wheel manufacturers or heavy-duty truck wheel manufacturers (the 18-wheelers aforementioned). The replacement market is ready with the spectacular extension of distances covered by all types of vehicles on American soil.
Un chiffre incontestable…