Gas Prices Redux

[CraigSca]

Ok, so the price of oil has now climbed to $60, and the price of gasoline has gone up about 25% in the past year (six months?). Yet, America has seen an INCREASE in gas usage over last year (3%).

What up with that? People get their panties in a bunch over higher gas prices, yet use more of the product.

[bob]

I know that here in Atlanta, a lot of people have painted themselves into corners in which they will have trouble reducing consumption. People commute 30 + miles to work so they can live outside the city but still work inside the perimeter. Prices obviously have not changed enough for drastic changes such as moving or switching jobs.

Now, I do have friends who know bike to work rather than drive, but that's b/c they work very low paying jobs, and gas prices can take up a large amount of their budget.

I'm just glad that I work from home. Don't kill my car, don't use a lot of gas, don't waste time in traffic.

[MrBigglesworth]

Oil consumption will increase because of the increasing population and the (nominal) growth of the economy.

[albionmoonlight]

Personally, I don't like driving--much prefer walking or biking or staying home--so I pretty much only do it when I have to. Therefore, gas prices would have to get crazy high before I stopped driving when I do. Gas to me is like milk. I don't waste it on purpose, but I also don't look at the price when I am buying it. It goes into the necessity column. The money that it takes out of my budget means that I will see less movies or buy less books--not that I will use less gas or less milk.

[mhass]

I use a flux capacitor.

[BigJohn&TheLions]

Originally Posted by CraigSca

Ok, so the price of oil has now climbed to $60, and the price of gasoline has gone up about 25% in the past year (six months?). Yet, America has seen an INCREASE in gas usage over last year (3%).

This is the perfect way to force the oil companies to lower prices. It is also the American thing to do. By burning more oil, we are doing our part to defeat the terrorists. If you are not burning more oil/gas than before, you are un-an American commie. And remember, the reason we are fighting terrorists over there is because it is better than fighting them over here. Mission accomplished!

[sachmo71]

but oil and terrorism are two different things!

[RPI-Fan]

Originally Posted by albionmoonlight

Personally, I don't like driving--much prefer walking or biking or staying home--so I pretty much only do it when I have to. Therefore, gas prices would have to get crazy high before I stopped driving when I do. Gas to me is like milk. I don't waste it on purpose, but I also don't look at the price when I am buying it. It goes into the necessity column. The money that it takes out of my budget means that I will see less movies or buy less books--not that I will use less gas or less milk.

Exactly the same for me.

[NoMyths]

Originally Posted by BigJohn&TheLions

This is the perfect way to force the oil companies to lower prices. It is also the American thing to do. By burning more oil, we are doing our part to defeat the terrorists. If you are not burning more oil/gas than before, you are un-an American commie. And remember, the reason we are fighting terrorists over there is because it is better than fighting them over here. Mission accomplished!

Heh...actually, a lot of oil profit goes to regimes that either directly or indirectly support terrorism. Consider where we get most of our oil from, and follow the money. So if your gas consumption has gone up, you're increasing your aid to the terrorists.*

My own sense of why consumption has gone up has more to do with urban sprawl and commuting longer distances to work than anything else.


* This sentence is also meant to be instructive for both Bubba Wheels and Noop (among others), who seem to still have a problem with the difference between "your" vs. "you're".

[CraigSca]

But wouldn't the decrease in the amount of pleasure trips (as well as the increase in hybrid vehicle usage) compensate for the additional urban sprawl in the past year?

This is just so typical of Americans - yell and scream about gas prices, but don't do anything about it. Then, when you realize you're not going to do anything about it, ask your leaders to do it for you.

[Farrah Whitworth-Rahn]

I guess I'm in the minority here, but I don't really care about the price of gas. So far as the price I pay at the pump anyway.

I figure I paid a higher price per gallon for the bottle of water I bought while my evil SUV was filling up, than I did for the gas going into my car.

[Lathum]

I'm in the necessity camp. I must go to work, therefor I must by gas to get there. The price I pay is irrelavant because I have no choice.

[Samdari]

Originally Posted by NoMyths

* This sentence is also meant to be instructive for both Bubba Wheels and Noop (among others), who seem to still have a problem with the difference between "your" vs. "you're".

Brilliant!

As for gas prices, I used to get upset, until my father asked me how much of a difference the $.50 increase in price meant each month. When I figured it meant about $10-$20 a month difference, I stopped caring.

Then, I read an article about how oil prices unnaturally drove up the CPI. As a federal employee, my salary goes up every year by the CPI+1%. So, perversely, I want gas prices to go up, as my income goes up more because of it than I have to pay in increased gas prices.

[Eaglesfan27]

I'm in the necessity category as well. Unfortuantely, my new job which starts on July 1st will more than quadruple my weekly driving. However, it will also pay quite a bit more and that will more than make up for the financial cost of the gasoline.

[CHEMICAL SOLDIER]

Im still hoping that gas will drop back to $ 1.50/gal/ within the next year.

[ISiddiqui]

Originally Posted by CHEMICAL SOLDIER

Im still hoping that gas will drop back to $ 1.50/gal/ within the next year.

I doubt it. I'm convinced that we've hit the new equilibrium in gas prices. We've paid much less for gas than we really should have for a long time (according to inflation compared with the price of gas).

[HomerJSimpson]

I wish I made the kind of money you guys make that can just shrug your shoulders at the current prices. I can't afford to do the things I need to do because I can't afford gas. At this point, I have no idea how I can pay for another tank before I get paid, and I'm going to have to have another tank to do my job.

[sabotai]

Originally Posted by NoMyths

Consider where we get most of our oil from, and follow the money.

Ourselves?

As for the price, before gas prices got "so high", I paid about $16-$17 to fill my tank. Now it usually costs around $20. So put in me in the "just don't care" group for now. When it gets up to $25-$30 to fill my tank, then I'll start feeling it in my bank account (barely feeling it). For now, a few extra bucks every week or so is negligable.

[Ryan S]

Originally Posted by sabotai

As for the price, before gas prices got "so high", I paid about $16-$17 to fill my tank. Now it usually costs around $20. So put in me in the "just don't care" group for now. When it gets up to $25-$30 to fill my tank, then I'll start feeling it in my bank account (barely feeling it). For now, a few extra bucks every week or so is negligable.

Currently it costs me about $72 to fill my tank.

Sometimes I need to fill up twice a week...

[Greyroofoo]

I live about a 1/2 mile from my job so I tend to walk a lot.
CEOs of oil companies are just laughing at Americans right now. They can raise prices all they want and no one will do anything about it.

[sabotai]

Originally Posted by Ryan S

Currently it costs me about $72 to fill my tank.

How's that "universal" health care that gas taxes pay for over there? Worth spending $150 a week on gas?

[The Shadow]

Originally Posted by Greyroofoo

I live about a 1/2 mile from my job so I tend to walk a lot.
CEOs of oil companies are just laughing at Americans right now. They can raise prices all they want and no one will do anything about it.

Do you think this is true? Do you really think oil company CEO's can raise prices all they want and no one will do anything about it? Or were you just ranting?

[Logan]

Originally Posted by The Shadow

Do you think this is true? Do you really think oil company CEO's can raise prices all they want and no one will do anything about it? Or were you just ranting?

Well, we're not going to cut down on our oil consumption. Everyone has become way too dependent on it.

[Ksyrup]

My car is my stereo system, so my use of the car is directly proportional to the number of CDs I buy. I've been driving a lot the past few years.

[The Shadow]

Originally Posted by Logan

Well, we're not going to cut down on our oil consumption. Everyone has become way too dependent on it.

Not at current prices, but what if the price was $5/gallon? Or like England or other countries, the price was $10/gallon? (I'm exaggerating a little - I think the price in England is like $7-8/gallon)

Like everything in a free market society, supply and demand drives prices. This means that we, as consumers, control half of the equation. If you don't like the high price of gasoline, drive less. Or buy a more fuel efficient car. Don't just sit around and bitch about those "oil execs" or whoever.

(I'm not trying to pick a fight - I'm just trying to say that we have some control over this.)

[Klinglerware]

Originally Posted by The Shadow

Like everything in a free market society, supply and demand drives prices. This means that we, as consumers, control half of the equation. If you don't like the high price of gasoline, drive less. Or buy a more fuel efficient car. Don't just sit around and bitch about those "oil execs" or whoever.

(I'm not trying to pick a fight - I'm just trying to say that we have some control over this.)

Actually, we will have less and less control over this as time goes on. You are right that supply and demand drives prices. But demand is not just coming from us: the economies of the developing world are growing (and the requisite demand for oil) at much higher rates relative to the developed world. While we can do a bit to control our consumption (through choice, fuel efficient vehicles, etc), in actuality, we will be more and more at the mercy of demand from China and the rest of the developing world. We might be seeing the beginnings of this now, as many analysts are pointing to Chinese consumption as a driver of the rise in oil prices in the past couple of years...

[Easy Mac]

I get 10 gallons or $20 bucks, whichever is cheaper. Its still 10 gallons by about $.30 on the good isle.

[ISiddiqui]

Originally Posted by sabotai

How's that "universal" health care that gas taxes pay for over there? Worth spending $150 a week on gas?

Who fills their gas tank twice a week? Hell, I fill mine maybe once every week and a half.

Oh, and I'm sure those gas taxes also pay for the superior mass transit system over there as well.

So, all in all, pretty decent deal, IMO. Health care hassles suck real bad.

[NoMyths]

Hell, wish I had health care.

[ISiddiqui]

Originally Posted by Klinglerware

Actually, we will have less and less control over this as time goes on. You are right that supply and demand drives prices. But demand is not just coming from us: the economies of the developing world are growing (and the requisite demand for oil) at much higher rates relative to the developed world. While we can do a bit to control our consumption (through choice, fuel efficient vehicles, etc), in actuality, we will be more and more at the mercy of demand from China and the rest of the developing world. We might be seeing the beginnings of this now, as many analysts are pointing to Chinese consumption as a driver of the rise in oil prices in the past couple of years...

Yep, this was also part of my point in regard to a new equilibrium. Other countries were dependant on us for the longest time because of our consumption. Now, with China and India growing at massive rates, we will find our gas prices at the mercy of their policies.

[Ryan S]

Originally Posted by ISiddiqui

Who fills their gas tank twice a week? Hell, I fill mine maybe once every week and a half.

I have to do a lot of driving at work (OK, they cover my mileage to the tune of almost a dollar per mile, but that is not really the point)

Originally Posted by ISiddiqui

Oh, and I'm sure those gas taxes also pay for the superior mass transit system over there as well.

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHA

Clearly you have never used the mass transit systems over here.....

[Ryan S]

Originally Posted by sabotai

How's that "universal" health care that gas taxes pay for over there? Worth spending $150 a week on gas?

I have no idea what the gas tax pays for. I assume the health service is paid for with our 40% income tax (plus a 10% national Insurance (stealth tax)), and our 17.5% sales tax. It might also be covered by "Council Tax", which cost almost $4500 last year in my neighborhood.

Barely worth paying for, because if you need something done quickly, you need to go private or you will die on a hige waiting list.

[AlexB]

You guys are lucky you don't live over here - diesel is around 90p a litre and unleaded about 86p a litre - there's apparently 3.79l to the US gallon, so that makes it £3.40 and £3.25 respectively, which at todays exhange rate makes our prices:

Diesel - $6.19 a US gallon
Unleaded - $5.92 a US gallon

[ISiddiqui]

Originally Posted by Ryan S

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHA

Clearly you have never used the mass transit systems over here.....

Of course I have . The London Underground is fabulous, as well as the train system in England.

I think you have never used the mass transit systems in most of the US (ie, CRAP!!)

[Ryan S]

Originally Posted by ISiddiqui

Of course I have . The London Underground is fabulous, as well as the train system in England.

I think you have never used the mass transit systems in most of the US (ie, CRAP!!)

The London Underground is the exception, not the rule.

Most of the train system is massively overpriced and terribly unreliable. Outside of London you are almost forced to use the car.

[ISiddiqui]

Originally Posted by Ryan S

The London Underground is the exception, not the rule.

Most of the train system is massively overpriced and terribly unreliable. Outside of London you are almost forced to use the car.

Actually I used the train to get from Southend-on-the-Sea to London. It was pretty nice. FAR, FAR better than the US's mass transit system.

[sabotai]

Originally Posted by Ryan S

I have no idea what the gas tax pays for. I assume the health service is paid for with our 40% income tax (plus a 10% national Insurance (stealth tax)), and our 17.5% sales tax. It might also be covered by "Council Tax", which cost almost $4500 last year in my neighborhood.

Barely worth paying for, because if you need something done quickly, you need to go private or you will die on a hige waiting list.

*takes out tape recorder and presses the record button*
Note to self. Do not move to Europe.
*presses stop and puts tape recorder away*

[Desnudo]

Originally Posted by ISiddiqui

Actually I used the train to get from Southend-on-the-Sea to London. It was pretty nice. FAR, FAR better than the US's mass transit system.

A horse and buggy is far superior to Amtrak. So is walking.

[John Galt]

There is an economic question about whether oil is an elastic or inelastic good. Elastic goods are governed by the normal principles of supply and demand with price changes according to changes in either suppy or demand. Inelastic goods, however, show little relationship between supply, demand, and price within margins. A prime example of an inelastic good is milk. Studies show that people don't change their demand even with large swings in prices. Many economists feel oil is similarly inelastic. If that is the case, the failure of price increases to decrease demand is not surprising.

[Ryan S]

Originally Posted by ISiddiqui

Actually I used the train to get from Southend-on-the-Sea to London. It was pretty nice. FAR, FAR better than the US's mass transit system.

There are a number of different rail operating companies all over the UK. Some areas are good, most are so so and some are truly appalling. London has excellent public transport, but most other towns and cities are not so lucky.

I used a local train service 5 times last year, and on two of those occassions the train was more than 30 minutes late (on a 35 mile journey). I would have taken my car after the nightmare 3hr journey on day two, but I had paid for a week long ticket.

Public transport in the UK is terrible and roads in the UK are terrible. I have no idea where the gas tax is going.

[CHEMICAL SOLDIER]

Im still hoping that we will never see the day of $ 5.00 per gallon.

[duckman]

Originally Posted by John Galt

There is an economic question about whether oil is an elastic or inelastic good. Elastic goods are governed by the normal principles of supply and demand with price changes according to changes in either suppy or demand. Inelastic goods, however, show little relationship between supply, demand, and price within margins. A prime example of an inelastic good is milk. Studies show that people don't change their demand even with large swings in prices. Many economists feel oil is similarly inelastic. If that is the case, the failure of price increases to decrease demand is not surprising.

I think it would be an inelastic good since we are so dependent on it. Until we can find better sources of energy, we are going to continue our dependency.

Of course, I could be wrong.

[Logan]

Once we have bought a car for travel, there is no choice but to spend the money on gas in order to use it. Of course, originally you could have decided whether it is more economically feasible for you to buy a car and spend money on what that comes with (gas, maintenance, etc) or use public transportation (or walk, bike, etc). But no one is going to leave their brand new $20,000 car in their garage because it now costs them $30 in gas per week, as opposed to $25, and choose to take the bus to work, as you are now wasting more money than you would be by just coughing up the extra money for gas. Hence, its an inelastic good. There is no substitute for gasoline (yet); there are only substitutes for cars.

[ISiddiqui]

Originally Posted by John Galt

There is an economic question about whether oil is an elastic or inelastic good. Elastic goods are governed by the normal principles of supply and demand with price changes according to changes in either suppy or demand. Inelastic goods, however, show little relationship between supply, demand, and price within margins. A prime example of an inelastic good is milk. Studies show that people don't change their demand even with large swings in prices. Many economists feel oil is similarly inelastic. If that is the case, the failure of price increases to decrease demand is not surprising.

Well you can't say elastic goods are 'normal'. Both can be normal, it just depends on how steep your demand curve is in the graph (inelastic demand is very steep, while elastic demand is not steep).

You have to seperate the short run and long run markets. In the short run, the gasoline market is inelastic, as increases in prices will not cause less consumption of the good. This is because it is needed to drive to work and other activities which rely on gas.

In the LONG run, however, people will purchase less gas guzzling vehicles and the market is more elastic. If you recall the gas crisis in the '70s, people bought Japanese cars which used far less gas in mpg. That lowered gas consumption greatly.

[Logan]

Originally Posted by ISiddiqui

In the LONG run, however, people will purchase less gas guzzling vehicles and the market is more elastic. If you recall the gas crisis in the '70s, people bought Japanese cars which used far less gas in mpg. That lowered gas consumption greatly.

While I agree with what you are saying in theory, I just don't know how practical it will actually end up being. More people buying Japanese cars in the 70's led to a rise in the quality of these cars as time went on, as obviously with more revenue coming in, more money could go into the careful labor and other technological advances necessary to make the Japanese cars as reliable as they are today. If we are depending on the same type of change in the auto industry to allow us to lower our gas consumption as a whole, I don't see it happening. For one, last I saw the purchase of SUVs and other gas-guzzling vehicles is still rising. This is probably because those that can afford a $35,000 SUV aren't worried about the extra cost in gas. Hybrid cars catching on would obviously help with this, but they seem to still be priced too high to account for the savings that would come by using less gasoline (despite the rebates, tax deductions, etc that come with some of these cars--and it seems the general public isn't even aware of these benefits).

[ISiddiqui]

Originally Posted by Logan

While I agree with what you are saying in theory, I just don't know how practical it will actually end up being. More people buying Japanese cars in the 70's led to a rise in the quality of these cars as time went on, as obviously with more revenue coming in, more money could go into the careful labor and other technological advances necessary to make the Japanese cars as reliable as they are today. If we are depending on the same type of change in the auto industry to allow us to lower our gas consumption as a whole, I don't see it happening. For one, last I saw the purchase of SUVs and other gas-guzzling vehicles is still rising. This is probably because those that can afford a $35,000 SUV aren't worried about the extra cost in gas. Hybrid cars catching on would obviously help with this, but they seem to still be priced too high to account for the savings that would come by using less gasoline (despite the rebates, tax deductions, etc that come with some of these cars--and it seems the general public isn't even aware of these benefits).

Hybrids are exactly what I'm talking about. You say they are priced too high at the current. They are about $2k more than their non-hybrid counterparts. That's less than Japanese cars were higher in cost in the '70s.

Also the American fuel economy is very poor. Cars from overseas are far better in gas mpg. We may be searching out those cars if gas gets too high.

[Logan]

Originally Posted by ISiddiqui

Hybrids are exactly what I'm talking about. You say they are priced too high at the current. They are about $2k more than their non-hybrid counterparts. That's less than Japanese cars were higher in cost in the '70s.

Also the American fuel economy is very poor. Cars from overseas are far better in gas mpg. We may be searching out those cars if gas gets too high.

Born in 1983, I wasn't even close to being around back then, so I don't know about the differences in costs. But yes, there is a wide gap in the costs of these cars. And one of the problems is that the gap in costs may be made up by the rebates available to consumers by buying hybrid cars. But like I said, I feel like the general public does not know of the cost advantages of these cars that can be recognized right away (manufacterers and tax rebates, especially).

And again, I feel like you are giving way too much credit to the American consumer. You are saying that they will seek out these more fuel-efficent means...but do they REALLY care? I'm not talking about Mr. and Mrs. Smith who drive their Taurus to and from work everyday. Rather, the bigger problem comes from those who fill up their Ford Excursions twice a week with enough fuel to power 6 cars over the same time period. They clearly have enough disposable income to buy such a car...therefore the best bet is that they have the money to fuel such a car. Maybe it has more to do with where I'm from...living in suburban New Jersey, nearly everyone has a huge gas-guzzling SUV, so maybe my persective is somewhat jaded.

I strongly feel that we will continue to use enough gas where it will eventually hurt us in the long run, but at the same time, feel like there is little we can do about it. Sad, I know...

[Rizon]

The last few times for me:

$2.80
$2.90
$3.14
$3.00
$3.13
$3.20
$3.14
$2.96

[Coder]

I definately think hybrids is the way to go. Here in Sweden, you get lots of benefits for driving a hybrid, not just the fuel-price. There's a lower "car-tax" (not sure about the US but we pay a yearly car-tax of about $200), you get free parking in the big cities (usually it's between $1 and $3 an hour to park in the city, sometimes more in the big parking buildings) etc. Not to mention the different fuel-alternatives are always cheaper.

The Toyota Prius uses an interesting technology, but the car is ugly as hell. My boss recently got one for his wife though, after calculating that:

1) They're saving $50 a month on parking outside her office
2) They're saving every 3rd trip to the gas-station, i.e. $80 a month
3) They're saving on the leasing-fee (subsidized by the government) $50 a month

That's a net save of about $180 a month as compared to her previous car.

It looks like Toyota will be implimenting this technology in other models as well and it will be interesting to see how things turn out. They're already using it in the Lexus SUV.

Unfortunately, Oil companies have bought up several hybrid technologies the past 40 years and cancelled them... I wonder where we'd be at if they hadn't.

[Raiders Army]

Originally Posted by Rizon

The last few times for me:

$2.80
$2.90
$3.14
$3.00
$3.13
$3.20
$3.14
$2.96

That's because you're in Antarctica.