Is The Price Of Gas Affecting You?

July 1st, 2008

I don’t write much about economics, but besides this recession that is here or not here depending on whom you ask, there’s no question inflation is noticeable to everyone who shops for groceries, and it’s increasingly impossible to ignore the rising gas prices. I recently looked over our gas bills in Quicken and the cost to fill up our relatively small and fuel-efficient Honda is creeping into the $60 range. This sucks.

A while back, I read a book about “peak oil” that suggested that once the price per barrel of oil hit $100, it would start affecting our economy. Well, we’re beyond that now, and some are speculating $200 a barrel will come sooner than later.

The effect on the economy becomes clear when one considers how much our American way of life is based on cheap oil — people commuting tens of miles to work, suburbs designed with houses after houses and no necessities within walking distance, gas expended to truck consumer items about, and lastly all the products we take for granted that are created from oil — plastic bottles for water come to mind. Oh, and all the money diverted to gas that could be spent on other things.

It’s serious enough that Fred Wilson is looking at the stock market performance during the 1970s — which were essentially a horizontal line — and wondering what the implications of expensive oil might be on investment and startup funding. Last quarter wasn’t so hot.

Some technology may benefit from higher oil prices. Consumers may choose to shop online instead of driving to a store. There may be large corporate investments in telecommuting technology, allowing workers to stay home and save on commuting expense. There may be large opportunities for green technology including the long-awaited electric car.

Still, I wonder how many people are so negatively affected by the rising price of gas that they will shut their wallets — bringing to light the consumer-led recession many of us have dreaded for a while now.

The increased prices haven’t drastically affected me personally. I’ve been commuting via CalTrain for the past few years and where we live is within walking distance to necessities, restaurants, and a movie theater. My work is on a 4/10 schedule which cuts down on trips to the office.

My biggest personal annoyance has been the San Francisco mass transit which has become noticeably more crowded — I’d say there are 25% more folks and at times, it’s standing room only — meaning a ride to work standing, with my nose in someone’s armpit. It’s really uncomfortable. But at least I’m not paying dearly for the privilege… yet.

So here’s the question: has the rise in gas prices affected you? And are you doing anything to adjust to the new reality?