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Some Thoughts On Gas Prices

Posted by PATRICK EDABURN in Uncategorized.
Jun 19th, 2008 | View Comments

Having recently completed a 750 mile road trip to Southern California I am well aware of the state of gas prices in the country (indeed I returned to find my home area had the highest gas prices in the entire nation). But as I was driving down it gave me some time to think about some interesting attitudes people have these days.

As a single person I understand I don’t have the same issues with gas prices that some people do so I decided to discuss the situation with my sister. She is married with 1.5 kids (new nephew/niece due in November) and both she and her husband commute to work. Running a little of the math we figured out that they probably average around 1500 miles per month which works out to a total of 36,000 miles a year. I decided to use this as the average mileage for an average American family.

Taking that 36,000 miles and adding ten percent for extra travel we get 40,000 miles of driving. Although they do a bit better overall I decided to assume an average of 20 miles per gallon which works out to roughly 2,000 gallons of gas a year. According to news reports gas prices have risen by $ 1.50 over the past 18 months (since January 2007) so the total cost per year for them has been about $ 3,000 dollars or roughly $ 8 per day (or $ 4 each).

Now I am not going to dismiss the importance of this money especially to a young family. But many of the people who complain (correctly) about the spike in gas prices are the ones sitting every morning at Starbucks. There they spend four or five dollars on a coffee that they could make for twenty five cents at home. Or they go into the convenience store at the gas station and spend two bucks on a bottle of water that has the same stuff that comes out of the tap at home.

Back at home these families spend money on cell phones for six year olds, they eat out to dinner several times a week and so on. Now just to be clear I’m certainly not meaning to suggest that these families are living in the lap of luxury. There are perfectly good reasons to give a child a cell phone for emergencies or to give Mom a break by eating out. But you don’t see people complaining about prices or trying to get more of a bargain here. They frequently pay far more than they should to get these services and don’t make a peep.

But if you raise gas prices then they act as if the world is ending, when it really isn’t. Gas prices are high but we don’t have people unable to drive to the grocery store because of the price of fuel. I understand and agree with people when they complain about high gas prices, but I don’t understand why they don’t have the same attitude about everything else in their lives.

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Jim_Satterfield

You can't simply quit driving to work. Given that, any ameliorative measures are also very difficult. With the real estate and credit crunches relocating to live closer to work is very difficult. Those factors also affect everything else. Most American cities just don't have enough mass transit to cope. Most of them that have mass transit are reporting large increases in its usage but they just don't have the funds now to expand to meet demand.

runasim

GreenDreams said:
Well, look at the autobahn. With gas prices twice ours, Europeans still drive. Fast.

They also drive smaller and more fuel efficient cars, walk and bicycle more,and plan their car trips more to avoid driving to buy only a quart of milk.

They eat out less frequently and cook their own meals more frequently.
They tend their own gardens more.
To enjoy their enviable vacations, they're more careful with money year round. They bring their own sandwiches on train and car trips instead of buying more expensdive meals in depots or at road stop cafes.

In general, they prioritize better and smarter.
They plan for and budget for those autobahn driving experiences.

GreenDreams

Well, look at the autobahn. With gas prices twice ours, Europeans still drive. Fast.

Patrick E

You make a good point DLS, while gas prices are clearly a problem for most of us, the fact is we are not to the point where people can't drive to the grocery store because of gas costs, though I do think people are modifying their driving habits somewhat.

DLS

"gas prices seem to be a focus for people while high prices/wasted money elsewhere seems to slip through the cracks"

And there's not a large constraint on ordinary, daily driving yet. Traffic is still heavy here in Detroit metro and the fuel-wasting aggressive, poor driving habits engaged in by so many on the roads here have yet to end.

GreenDreams

Great discussion. The sad truth is, we have been incredibly selfish and short-sighted. We used up the good times, and failed to heed numerous warnings. In fact, we ridiculed and demonized those who saw this coming. Even now, those who argue for serious changes are called "Chicken Littles". Meanwhile, convinced it's "morning in America" we spent our savings, maxed out our credit cards, got second and third mortgages, bought big cars and acquired expensive habits. We were living large on our credit cards. We have been living large on our kids' credit cards. Because now, we've ruined the dollar, we're 1.5 trillion behind on critical infrastructure repair, 9.4 trillion in debt and still arguing whether or not we should just continue down this path. When Jimmy Carter left office, the debt was ONE trillion.

For some perspective on Patrick's numbers, each employed American owes $250 a month interest on the debt. That's $6,000 a year for his sister's family (assuming both work). And that doesn't pay down a dime of the debt, which goes up by a staggering half trillion a year under Bush. We had a big party and charged it all to our kids, to whom we lovingly bequeath a mountain of debt and a degraded planet.

runasim

The price pinch is unmistable,worrisome and, for many, terrifying.

I think, however, that we are reaping what was sown by decades of ignoring warnings.
Fuel efficinecy, conservation, mass transportaion, questions about diminishing oil supplies are hardly anything new.
Each time these subjects were brought up, however, the implications were ignored, and they have been scoffed at by many.

We've been a nation of proud SUV and McMansion owners., with a feeling of entitilemant to cheap gas and cheap goods. . Those hard working blue collar workers huritng now also voted for Bush and his energy non-policies in large numbers.

I understand the trouble we're in now, but I also think Patrick has apoint.
If things hadn't got as bad as they are now, would anyone be paying atttention today to the decades-old warnings?

I hope we seize the silver lining around the storm clouds, and, for once, ignore campaign promises about easy fices and gas tax holidays. I hope that finally, we grow up enough to insist on reasonable estimates for the future and long term solutions.

Rambie

Well Patrick, not just the Starbucks sipping bottled water drinking elites are getting the pinch. Now there is some truth there are some luxuries that can be cut to help offset the price of gas for most of us. I know many who have already cut back on many items and are facing much more than cutting out their Starbucks habit.

I too am cutting back on things. I eat out less, purchase food more frugally, cut out extra driving.

Also what kind of impact by cutting out luxuries is on the economy?

JSpencer

I suppose if everything else had remained the same, high gas prices would be relatively easy to adapt to. The fact is, prices on almost everything seem to have been rising steadily for some time now. The high gas prices are (for some people) the straw that is breakin the camel's back. That said, I believe there are a great many people in this country who complain about the increased strain of having easy access to what are in reality luxuries. Those of us with relatives who told us stories about living through the depression realize that what many folks consider to be necessities are far from it.

Patrick E

Thanks for the comments so far.

As I tried to make clear in the post, I am in no way dismissing the burden this is on families. Speaking specicially to myself and my sisters family they don't do the starbucks or the bottled water.

However the lines at SB are full every time I drive by. Again my general point was that gas prices seem to be a focus for people while high prices/wasted money elsewhere seems to slip through the cracks.

As to the falling dollar, I am hoping to post a series of posts on oil prices and the dollar in the coming weeks. I'm no scholar but I hope to provide a little insight for people to discuss over.

Michael Merritt

My comment is kind of a combination of the two above.

The fact is that not every family is made equal. You don't mention the financial situation of your sister. If she and her husband have pretty good jobs, then maybe they are able to handle the situation without much headache. Of course, the extra mouth to feed to come could change things. Who knows.

Not everyone is as lucky to have such good jobs. They may be employed in the "low" jobs (i.e. the ones everyone keeps associating with illegal immigrants), may be self-employed, and not employed at all during this current time.

For my dad, it's the second option. He runs his own small business in an industry that's changed a lot since he started doing it, along with the attitudes of many of his customers. Now, I know that's not anybody else's fault (except perhaps the big box companies that have bastardized the industry with their crappy systems). Yet, the fact remains that running a small business is hard to do in the best of times. Well, what happens during a slump in business? That's right, you just don't have the money coming in during those times.

There are some things he could do better. I often say he's probably the local Dunkin Donut's best customer (though he usually only gets it once a day), and those charges can add up. He could probably cut back a bit on them; fortunately, we're about to consolidate home and business into a new building, so that could become a reality.

Circumstance, along with other factors like the dropping dollar, have to be considered when discussing anyone's ability to afford gas. Can my dad get to his business and around where he needs? Sure. Does he find it tough to do? Definitely.

Jim_Satterfield

archangel beat me to it. The numbers Patrick cites are the same for families in similar situations who have never seen the inside of a Starbucks and laugh at the idea of buying bottled water instead of tap water. A cell phone for the kids? Are you nuts? They barely can afford to keep a roof over their heads and food on the table. And there are lots of them in this situation.

AustinRoth

It is even more devastating to the transport industry, not just airlines, but trucking companies and the like. The number of trucking companies that have failed in the past 18 months is triple the previous 10 years.

Think of the overall inflationary pressure this will cause (or conversely, if the Feds keep lowering the interest rate the continued devaluation of the dollar). These costs also get passed on, as do higher heating bill for those on gas, etc.

Simply looking at the effects of cost of gasoline on direct driving doesn't begin to capture the overall effect on a family budget.

archangel

Youre right, Patrick, there is a lot that rises to the surface in our times, esp when there are rapid inflating pricings and loss of value at the same time.

I've grown chidren who have children, one with disabilities, one with a serious neurological illness. The cost of gasoline and food prices are far more devastating to those who are already tightly frugal. They dont go to starbucks or drink bottled water; they're in the trades, and the gas prices and cost for solid nutritional food for their children (they go through milk like water) is deeply stressful as they watch their savings dwindle and do not know what the future holds for health. I have read the scoffing about Americans and their precious cheap gasoline on many blogs over time. However, for those who already struggle, the rage and speed with which the increases came on, and the ongoing need to go to jobs involving labor at different sites is nothing to scorn in any way in my humble opinion.

For those who have the luxury of having to decide to forego a $2.00 latte or whatever they cost, that's fine too. For those who have to forego nothing, that's fine also. But... It isnt fine in any way for those who have little or nothing and who also have serious health issues and who also have children. Nowadays, many families with young children are middle aged, not 'young'. THe inflations affect them too, regardless of age

just my thought.

dr.e

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