Oil, Housing Worries Threaten the American Dream: Mark Gilbert
A rumor swept through the U.S. town of Annapolis, Maryland, last week. Local gas stations were running out of fuel and planning to shut. Anxious motorists lined up to fill their tanks, prompting one pump owner to tell a local radio show that panic buying might drain him dry and force him to close.
My annual U.S. holiday visiting the in-laws was an opportunity for first-hand experience of the two obsessions dominating dinnertime conversations there: bemoaning the seemingly relentless increase in fuel prices, and applauding the surge in housing values.
It's one thing to read the statistics about the popularity of sport-utility vehicles and four-wheel-drive gas-guzzlers with U.S. drivers; it's quite another to nose your compact rental car into a shopping-mall parking lot and find yourself dwarfed by row upon row of trucks that wouldn't even fit down many U.K. and European streets, never mind squeeze into a parking space. What are these people shopping for? Cattle? Lumber?
The prevalence of these turbocharged behemoths of the automobile industry makes it hard to sympathize with the bleating about fuel costs, though a bumper sticker reading ``How'd Our Oil End Up Under Their Land?'' did raise a reluctant smile.
Illegal Tender
With the devastation wrought by Hurricane Katrina rolling across the nation's TV screens, and oil spiking to $70.85 a barrel on Aug. 30, U.S. motorists are starting to entertain the possibility of oil rising to $80, $90, even $100. And whatever the economists would have you believe, there's still no way to pay for gas using inflation-adjusted dollars, making comparisons with previous so-called oil shocks pretty useless in trying to gauge the possible effects on consumer spending.
At a Thursday night barbecue, a lawyer facing a lengthy car trip recounted her plans to stick to the speed limit of 55 miles per hour (88 kilometers per hour) for the whole journey. She figured her anticipated fuel saving, which she guessed at about 25 percent compared with her typical driving speed, was worth the risk of being honked at by speedier, less frugal motorists.
The AAA motoring organization says the average U.S. pump price for gasoline rose to a record $3.06 a gallon on Sept. 2, up from $2.32 a month earlier. It says residents of Washington, the nation's capital, paid prices of $3.35. Refilling my rental car's tank on the outskirts of Washington on Sept. 3, I paid $3.50 a gallon. It would probably have been cheaper to renege on my contract with Cendant Corp.'s Avis unit by returning it empty.
Wonderful Windfalls
Both of the households that acted as hosts during the trip have enjoyed tremendous gains in the value of their houses. So, along with millions of their fellow windfall recipients, they're liberating those bonuses by refinancing their mortgages to fund spending they otherwise wouldn't be able to afford.
House prices in the Washington-Arlington area surged more than 26 percent in the second quarter from a year earlier, according to the National Association of Realtors. My friends there, who bought a parcel of waterfront land five years ago, are using that windfall to finance their dream of a holiday retreat, at least five years earlier than they expected to be able to afford to develop a second property.
Prices in Baltimore, meantime, climbed 17.5 percent in the three months to June, more than enough to pay for landscapers to sculpt a fancy new front garden and fix some longstanding drainage problems for my second set of hosts.
That makes them contributors to a trend that drove mortgage refinancing applications up by 25 percent in the second quarter, as U.S. consumers sucked more than $212 billion out of their housing equity, up from $170 billion in the first three months of the year. The housing boom is defraying projects that would otherwise be unaffordable.
Cheap Dreams Aren't Made of This
A fun part of an annual sailing trip to the Chesapeake Bay is docking at a small town and fantasizing about swapping the hectic London lifestyle for a slower pace of life in some rural retreat. In years past, the window of a local realtor would feature at least two or three shotgun shacks or fishing huts with a couple of bay- facing acres, at prices low enough to sustain the dream.
Not this year. A postage stamp of land for sale in Rock Hall, a town with a population of a few thousand on the Eastern Shore area of the bay, proudly proclaimed itself the only waterfront property available for less than $1 million in the area. Gulp. So, unless (until?) the U.S. housing bubble bursts, that place by the lake is out of reach.
Besides, to fit in with the locals, I'd have to buy a Ford Leviathan or a Chevrolet Hippopotamus, and the cost of running that would be ruinous even if the housing purchase hadn't already bankrupted me.
Maybe next year's holiday should be in Bulgaria.
A rumor swept through the U.S. town of Annapolis, Maryland, last week. Local gas stations were running out of fuel and planning to shut. Anxious motorists lined up to fill their tanks, prompting one pump owner to tell a local radio show that panic buying might drain him dry and force him to close.
My annual U.S. holiday visiting the in-laws was an opportunity for first-hand experience of the two obsessions dominating dinnertime conversations there: bemoaning the seemingly relentless increase in fuel prices, and applauding the surge in housing values.
It's one thing to read the statistics about the popularity of sport-utility vehicles and four-wheel-drive gas-guzzlers with U.S. drivers; it's quite another to nose your compact rental car into a shopping-mall parking lot and find yourself dwarfed by row upon row of trucks that wouldn't even fit down many U.K. and European streets, never mind squeeze into a parking space. What are these people shopping for? Cattle? Lumber?
The prevalence of these turbocharged behemoths of the automobile industry makes it hard to sympathize with the bleating about fuel costs, though a bumper sticker reading ``How'd Our Oil End Up Under Their Land?'' did raise a reluctant smile.
Illegal Tender
With the devastation wrought by Hurricane Katrina rolling across the nation's TV screens, and oil spiking to $70.85 a barrel on Aug. 30, U.S. motorists are starting to entertain the possibility of oil rising to $80, $90, even $100. And whatever the economists would have you believe, there's still no way to pay for gas using inflation-adjusted dollars, making comparisons with previous so-called oil shocks pretty useless in trying to gauge the possible effects on consumer spending.
At a Thursday night barbecue, a lawyer facing a lengthy car trip recounted her plans to stick to the speed limit of 55 miles per hour (88 kilometers per hour) for the whole journey. She figured her anticipated fuel saving, which she guessed at about 25 percent compared with her typical driving speed, was worth the risk of being honked at by speedier, less frugal motorists.
The AAA motoring organization says the average U.S. pump price for gasoline rose to a record $3.06 a gallon on Sept. 2, up from $2.32 a month earlier. It says residents of Washington, the nation's capital, paid prices of $3.35. Refilling my rental car's tank on the outskirts of Washington on Sept. 3, I paid $3.50 a gallon. It would probably have been cheaper to renege on my contract with Cendant Corp.'s Avis unit by returning it empty.
Wonderful Windfalls
Both of the households that acted as hosts during the trip have enjoyed tremendous gains in the value of their houses. So, along with millions of their fellow windfall recipients, they're liberating those bonuses by refinancing their mortgages to fund spending they otherwise wouldn't be able to afford.
House prices in the Washington-Arlington area surged more than 26 percent in the second quarter from a year earlier, according to the National Association of Realtors. My friends there, who bought a parcel of waterfront land five years ago, are using that windfall to finance their dream of a holiday retreat, at least five years earlier than they expected to be able to afford to develop a second property.
Prices in Baltimore, meantime, climbed 17.5 percent in the three months to June, more than enough to pay for landscapers to sculpt a fancy new front garden and fix some longstanding drainage problems for my second set of hosts.
That makes them contributors to a trend that drove mortgage refinancing applications up by 25 percent in the second quarter, as U.S. consumers sucked more than $212 billion out of their housing equity, up from $170 billion in the first three months of the year. The housing boom is defraying projects that would otherwise be unaffordable.
Cheap Dreams Aren't Made of This
A fun part of an annual sailing trip to the Chesapeake Bay is docking at a small town and fantasizing about swapping the hectic London lifestyle for a slower pace of life in some rural retreat. In years past, the window of a local realtor would feature at least two or three shotgun shacks or fishing huts with a couple of bay- facing acres, at prices low enough to sustain the dream.
Not this year. A postage stamp of land for sale in Rock Hall, a town with a population of a few thousand on the Eastern Shore area of the bay, proudly proclaimed itself the only waterfront property available for less than $1 million in the area. Gulp. So, unless (until?) the U.S. housing bubble bursts, that place by the lake is out of reach.
Besides, to fit in with the locals, I'd have to buy a Ford Leviathan or a Chevrolet Hippopotamus, and the cost of running that would be ruinous even if the housing purchase hadn't already bankrupted me.
Maybe next year's holiday should be in Bulgaria.
