Gas Prices are Still (Relatively) Cheap
The media feeding frenzy over higher gas prices is just about to hit an all-time high as a gallon of gas will likely top out at $4.00 a gallon this summer. Now, I don’t particularly enjoy paying higher prices for anything (after all, I am the Frugal Dad), but if I hear another sob story in the news about higher gas prices causing all kind of social side effects I think I’ll unplug the television for good.
Last summer the mainstream media ran story after story telling us how many families were having to cancel their summer vacation plans because of high gas prices. Oh come on! Has anyone actually stopped to do the math here? Let’s assume the average family vacation involves a 1,000 mile round trip to Disney World. Your brand new SUV might get about 23 miles to the gallon on the interstate. Last year you spent about $3.25 on a gallon of gasoline. So how much more will it cost you to take that same trip this summer, assuming the price does hit $4.00 per gallon? About $32.60. A 1,000 mile road trip at 23mpg uses about 43.47 gallons of gasoline. The $0.75 per gallon jump from last year’s prices only makes your trip $32 more expensive. So for thirty bucks you are scrapping your entire summer travel plans? Gee, that’s too bad. I guess you could always go to Outback Steakhouse and spend $40 on dinner to make yourself feel better.
I’m always amused by the people who typically whine about gas prices. They are almost always smokers, or drinkers, or overinduglers in soft drinks, or some other vice. Have you ever thought to compare the cost of a gallon of gasoline to so many other things we consume? Check this out:
- 1 Gallon of Gasoline ($3.23 - the average cost in the U.S. at the time of this post)
- 1 Gallon of Skim Milk ($3.78 - my local Kroger store’s price)
- 1 Gallon of Bottled Water ($6.40 - assuming $1.00 for a 20oz. bottle in vending machine)
- 1 Gallon of Beer at a Restaurant ($19.20 - assuming $3.00 for a 20oz. frosty mug)
Try pouring a gallon of skim milk, bottled water or beer in your gas tank and see how far your car will go. None of these other products have anywhere near the cost-to-market expenses as gasoline. The components of gasoline must be explored, drilled, stored, shipped, refined and then shipped again before the product is worthy enough to fill your gas tank. Of course all that takes equipment and manpower that must be paid for out of gasoline sales. I’m not defending the profits of oil companies, but their margins are comparable to that of high-end clothing and overpriced technology gadgets.
Before you complain about high gas prices wrecking your budget, consider the relative costs of other goods and services you spend money on. For instance, last summer I griped about the cost of gas while paying for lawn treatments from a local fertilizer company. I realized how ridiculously expensive that service was and decided I could spread fertilizer and aerate my own lawn for a fraction of the cost. Others may spend twice their gasoline budget on eating out every month. The point is to not let the media give you an excuse (gas prices) to stay broke. There are plenty of other opportunities in our lives to practice frugality and help our bottom lines, even as the costs of other spending categories rise.
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Wow! I can’t believe it’s only a $30 difference. Very cool statistic
I’ve heard it said that if we put the price of a gallon of MILK (insert any commodity there) in foot-high letters on every corner, then that’s what people would be complaining about. Very true, I think!
I actually think high gas prices are good for us. It will force us to rethink our consuming ways, consuming oil and parklands to get it, consuming farmland for our suburbs, etc. It might even get us walking again so we can meet our neighbors.
Not everyone has the luxury of giving up vacations and $40 dinners at Outback and someone to take care of our lawns. Some of us need every penny of our gas budget just to get to work and back home. Whether you believe it or not, the price of gas is impacting the lives of many people and not just because of the media.
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I agree with Jon - this is a GOOD thing that gas prices are going up. It will force people to conserve more, buy smaller cars, etc - to think beyond the front end of their giant SUV…that they drive around all day and complain about gas prices in.
Americans seem to forget that in Europe they pay up to 4 times more than we do for gas…I think we can stop complaining once we see the price over there!
i get a kick out of people who rush to the gas station to fill up because they hear gas is going up overnight, etc. i’d rather not sit in line at the gas station to save 25¢ thank you very much.
good blog post
Gas prices are high, getting higher and it is just a fact of life. I don’t see anything changing anytime soon.
I think everyone needs to look at other areas of their finances to cut back on. Skipping the cable might help pay to fuel up the cars and what is more important? After all, you need your cars to get to work.
I also agree with Jon- this can maybe help people to re-think their spending, their consumption and maybe get people involved in more “green” efforts.
Take Care
LJ
Gas prices will come down when people finally realize that we need to drill for more oil and build more refineries. There’s more oil under the Gulf of Mexico than in the entire Middle East according to some estimates. Drill for Pete’s sake. And don’t forget ANWAR and the coasts of California and Florida.
It’s funny because whenever gas prices go up, I remind myself that we are Exxon stockholders. It seems they kind of balance each other out!
I like your example of the summer vacation. Really puts the price of gas into perspective.
I think what ticks me off about the gas prices is not the actual price, but the BS excuses to raise the prices. Example: A refinery stopped working and is under repair, so the prices go up immediately. Ridiculous seeing that the gas in the holding tanks at gas stations is completely independent of the refinery going offline. Yet we have to pay more for it. Total joke! No wonder oil companies are showing record profits, they got us by the short hairs and we are putting up with it!
Also, consider the prices in other parts of the world. I had an “awakening” last week that I wrote about:
http://mrsnespysworld.blogspot.com/2008/03/perspective.html
I watched a contractor fill his tank on his truck the other day and the total came to right about a $100. This was just a pickup truck. Gas prices effect more than just our gas bill. Contractors costs are going up. Farmers have to pay more to run the tractors that help to grow our food. Truck drivers have to pay more to deliver it. Higher gas prices mean higher cost of everything.
Out here in the rural areas where the grocery store is 15 miles away and nearest Walmart is 25-30, gas prices have a huge impact especially when your budget is already stretched to the max. I’m not worried about vacation, I’m concerned about going to work every day. That $30 or $40 extra dollars I spend a month on gas has to come from somewhere. And I fuss about the price of milk too but I don’t drink 100 gallons a month so it has less impact on my budget.
Since the big oil companies are making money, maybe we should include them in our retirement portfolios so we can get in on some of that action. Who knows, it may take away the sting of gas prices going up. And I agree with Ron- there is more oil out there- sometimes I think half the cost of gas is based on speculation and hysteria.
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Great post - I have a post scheduled which also talks about gas prices - I think people really over-emphasize them because they are so visible and they fill up their cars so often.
If I’m not mistaken, gas went up slower than inflation for a long time but in the last several years - it’s been catching up!
Mike
i agree completely, let’s stop whining about gas prices - the prices aren’t that much more..
and as ron says above - let’s start drilling and opening more refineries. That will allow us to be less dependent on the middle east, and cause a drop in prices!
Dear Frugal Dad, as much as what you say is true, you should also consider that no other business in this country recorded net earnings in billions. Also, maybe not for you, but for other people milk, gasoline & other items of comparison are a necessity. Last year, I filled up my car with $20.00, now it’s $40.00. Those $20.00 would serve me better at Outback and also, I would rather spend them there. Gas prices are out of control and for no reason. Too bad not all of us have stock in a gasoline company to cancel out the effect.
Well, it’s great to see that in the US some don’t complain about gas prices.
I’m living in France, we’ve got a gasoline litre @ 1.3€ that is $7.7 the Gallon of Gasoline!
And yes, we pay twice more in Europe.
When you drive 40 miles one way to work every day for 5 days a week,All of a sudden your gas bill is higher than your car payment. Move closer to work? I love my home and the quiet country setting. Like someone else said, We don’t drink 5 gallons of milk every day.
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Well, I do find it interesting to see the price of fuel versus other products like water that we consume and tend to purchase without thinking twice about the cost.
However, paying for fuel is not enjoyable and the fact that the gas companies make the profit numbers they do, makes people upset. But think of it from any company other than gas. Wouldn’t you try to maximize profits even if people didn’t like the prices? Absolutely!
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I may have left wrong email on 1st try, but my question, which is never answered is the price of a liter of gas in France. (2008)I go on sites that mention France travel, and gas prices, but never actually post them.
Robert
http://www.zagaz.com/prix-carburant.php?departement=14
http://www.prix-carburants.gouv.fr/
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YEAH FRUGAL DAD! OUTSTANDING POST!
Yeah all you Socialist pigs — What is wrong with the oil companies making money?! Do we STILL live in a fantastic Capitalist country? I can not stand when people always make business the BAD guy. They are supplying you lazy slobs jobs…they are making smart people who invest money in the stock market and 401K’s. And you do not have to be rich to have a financial plan. You just need to do the keyword — PLAN! Open your own oil company…while you still can before the Democrats make us a Nanny State where you won’t have the option…because THEY know what’s best for you, your family and your money! Why in heaven’s name should we overtax ANY business. I believe that is what started the move of companies out of the USA….fault of the DEMOCRATS — who now complain that companies that go overseas should be TAXED MORE? Put BIG BUSINESS out of BUSINESS - that’s great — that will sure help the economy!
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I don,t live in europe you fool I live in america!! and are very concerned about high gas prices! do you fools know how many americans have lost their jobs because of gas prices? if you don,t want to return my e-mail I will understand, cause of yor comment about europe and their gas problem. maybe you should move their, cause you are not american! you are a politican, who screws people any way they can, with your lies..
shove it rick in yulee
Good observation about the media hype and our fixation on gas prices. Unplugging the TV is always a good idea.
Many years ago I remember seeing a national news broadcast about how the recession had affected various people. They interviewed a 30ish guy who was “hit hard” by the recession. The guy was playing pool in the finished basement of his new, beautiful, large and well appointed home on 5 acres. Poor guy.
The man sipped his bottle of beer as the camera captured his leisurely pursuit of pool. He turned to the camera, raised his beer and remarked that he had to drink beer because it was a poor man’s champagne. Poor guy.
I guess the media couldn’t stomach a real recession story. Reporting the truth can be very difficult. It’s hard work.
Anyway, yes we get wrapped up in the rising price of gas, and we scream at the oil companies, but few of us understand some of the key reasons behind the higher prices. Our lack of understanding is mainly because the TV likes to report on symptoms rather than causes.
Again, real reporting can be difficult. Your initial idea still looks good - unplug the TV.
Clair
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