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?

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Viewing 9 Comments

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    • v
    A good way to combat these high prices is to try and show Big Oil that each American can make difference. If everyone decides together to boycott one company, Exxon Mobil, the entire industry will listen.

    I’m part of a campaign to boycott Exxon Mobil, the current leader in profits during this energy crisis. It is hosted on The Point, a new social action website. Check it out here www.thepoint.com/campaigns/send-a-message-to-th...

    Hopefully, we can all do something about this terrible injustice
    • ^
    • v
    Definitely, lowering consuption is part of the solution. Not sure if I'd go
    as far as a boycott of a particular company, but it also wouldn't be hard to
    avoid buying gas at the most egregiously expensive companies.
    • ^
    • v
    I find boycotts like this rather silly. They tend to disregard the root of the problem to begin with. Sure pricing manipulation may be part of the problem, but the problem is multifaceted. As Jason states above, part of the problem is our related to suburban sprawl, part of it is related to global consumptions patterns, part of it is related to finite resources. The list goes on. On top of that, this country is so oil addicted, I think you'd be hard pressed to drum up 20mm people.

    The thing of it is that our lifestyle is a prime factor in the energy crisis. We need to take responsibility for this "terrible injustice" (I really don't see it as such). Until we get that one through our thick skulls, we'll keep repeating this cycle until the oil is depleted. Hey Feds, how about showing some spine and raising those CAFE standards again?

    Fortunately, there are some companies (not Detroit of course, though they're trying to change their tune...finally) who are working to remedy this. Alternative fuels, electric cars, bicycling, car sharing, mass transit, etc. These should be supported. Of course we're too busy spending billions on bombs and wars to take care of our infrastructure and take REAL measures to reduce oil dependency.

    And what happens after the 20 million people are finished with their boycott? Oh let me guess, they'll start right back up consuming at which point the any temporary blip to the demand side of the equation are erased. Great long term solution.

    By the way Jase, here's a fun little web app that helps you measure the walkability of your neighborhood. It's a good way to see who will be getting by fine in future oil crises and who will be hurting:
    http://walkscore.com/
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    • v
    Cool site, our place got a 74 out of 100. That's on their "Very Walkable -
    possible to get by without a car" scale. The highest is "Walker's Paradise"
    which I'm sure papa's place is.
    • ^
    • v
    Yeah, the current place scores a 98/100 :-)
    • ^
    • v
    I am almost embarrassed to admit, but I work from home so my car (my Wife's is a different story!) didn't see the gas station at all in June. Can't say I am hating that!
    • ^
    • v
    That's an awesome place to be! I hope more companies allow telecommuting to
    reduce their employee's gas bills.
    • ^
    • v
    The question is how I've changed my habits due to rising gasoline prices? I in a very small minority in that I can honestly say - not at all.

    I live in a small county (250,000), in a suburb of a small city (130,000) in northwest PA. So first off - I live 2 miles, 1 traffic light and three stop signs from work in a small- to middle-sized company (2800 globally). Another words while I live 4 minutes away from work drive time, I liv in the suburbs. Yet everything I also need to live *is* within minutes. And yeah, by "minutes" I mean tha a 20 minute drive is "long" for me.

    My Didge Neon runs through a full tank (12 gallons) every 3-4 weeks. Please, not bragging, just saying I realize how small of a minority I'm in.

    I'm thinking about moving further away... there's this one place with 250 acres that is about 10 miles away from everything. Back in 2003-2005 I used to regularly drive 100 miles (200 miles roundtrip) into Cleveland for baseball games at like 70 per season. Back then I could treat a ballgame as though it would be $25 - $10 for gas, $15 for two beers (I always tip). By 2005 I was noticing two things - an easy 20 cent difference of gasoline prices on my way to/from games and how I needed to mentally increase my budget from $10 per game (@1.20 gallon) to $15 per ($1.90 gallon).

    I simply cannot imagine what prices today would mean. And yeah - that sort of thing... routines that involve groceries and commuting to work... how those would impact my budget if the commute was 12 miles one way instead of two. Let's just say that this move is on hold this year. No sense in it.

    But the other thing asked was about online buying. Here I just don't see where I'm in the minority. Let's take three things - a DVD or book, groceries, and a new computer.

    I purchase DVDs and books via whatever is convenient. Always have. If I have time to wait a calendar week to get it then it'll always be Amazon and if not it'll be my local grocery store or iTunes. I see gasoline prices changing nothing there. The dependent factor is how much of an impulse purchase is it - not gasoline, drive time, or shipping costs.

    Groceries? Answer is obvious - I'm driving to where I always do. Sure, for the last 10 years it's been that Giant Eagle about 4 minutes away, but even when I lived in Cleveland it was drive to the nearest grocery store. I could see gasoline prices changing my habits in terms of WHAT/HOW my routines are - but that ain't the same as purchasing groceries online.

    Which brings us to computers. Or any "big ticket" item (over $200, $500, whatever). There's a Best Buy and Circuit City within 5 minutes of me. An Apple Store? Nearest is in the Cleveland suburbs about 120 miles away. Funny thing on these things - I'll only pay those high shipping prices if (a) there's nothing available in town or (b) I desire to wait for ground shipping which is - and HAS been for years - free. You do the math... how is this affected by the fact that gasoline has doubled in price over the last 2 years? It hasn't.

    And I don't think that one changes for those who live within 25, 125, or 325 miles from such stores. Shipping prices reflect gasoline prices. And when shopping online you either pay nothing and wait, or pay something more than it would cost to drive to wherever because you don't want ot waste the drive time (not the drive cost). Online shopping is about the convenience - be it drive time, weather, whatever. Nobody shops online because gasoline prices doubled in 2 years.
    • ^
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    Your biggest advantage is living only a few mintues' drive for work, that's
    awesome, and definitely in the minority which you must enjoy.

    Good point about shopping online being more about convenience than gas
    prices. Shopping online - the biggest savings is the current trend free
    shipping. I do wonder if this will last? - if gas prices remain high, will
    Amazon and those folks decide someone has to pay to truck all this stuff
    around, and pass the cost over to the consumer?

    Then... there is iTunes. Instead of paying gas to ship a DVD from coast to
    coast, just download the movie and no UPS truck has to spend the amount of
    gas to deliver your package.

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