$4 Gas - Here We Come

[bamboogrrrl]

Oy, I paid $3.59/gallon this morning in NY...

 

[uncledrz]

2.99 today in uppermidwest. price was up to 3.39 but has come down once the immediate hysteria passed.

Interesting point we went over last night. Price has increase over the past few years from 1.50 or so to well into the 3.00 range, yet there is almost no change in driving habits or vehicle selection. At what price will we as a nation start to use less? Or is gas (and the transportation freedom it allows) simple not price elastic and we will continue to use it at the same rate no matter what the price?

 

[Nords]

At what price will we as a nation start to use less?  Or is gas (and the transportation freedom it allows) simple not price elastic and we will continue to use it at the same rate no matter what the price?

I think that you won't see a behavioral change until gas consistently costs more than bottled water.

I used to think that was $5/gallon. Now I'm thinking $7.50.

 

[REWahoo]

At what price will we as a nation start to use less? Or is gas (and the transportation freedom it allows) simple not price elastic and we will continue to use it at the same rate no matter what the price?

Could be. Note this quote from a car dealer talking with car buyers over the weekend....

"Do you want to save $10,000 right now," he said, or wait years to accumulate that amount in savings from a high-gas-mileage vehicle?

The fact is, he said, folks keep buying big vehicles, despite grousing about the spinning digits at the pump.

Hummer buyers, it seems, are different.

"People who buy Hummers, they don't give a damn about gas prices," said Robert Shahbazian, a salesman at Team Automotive of Pasadena. "They don't even ask about the mileage Hummers get."

http://www.latimes.com/business/la-fi-autos6sep06,1,7877006.story?coll=la-headlines-business

REW

 

[sgeeeee]

. . . At what price will we as a nation start to use less?  . . .

There may be a small reduction coming from a small group of people if gas stays as high as it is right now.  For people driving 20k miles per year or more and a car with mid-teen gas mileage, the cost increase from $1.50 to $3.00 can amount to a couple of thousand dollars per year.  To some low income people, that might cause them to change habits at least a little.  

But I'm not sure that $2000 per year more on gas is on many American's radar screens.  And for those who are concious and frugal, they probably have already been taking action to get better gas mileage, reduce driving where possible, etc.  So the cost increase to them is even less.  For example, take the same 20K mile per year driver, decrease miles by 10%, own a 25 mpg car and the impact of the gas is only about $1k per year.  That's still an impact, but a lot of Americans waste more than that on dryer sheets and kayak every year [1].

I'm still waiting to see what increased gas prices do to the price of everything else we buy.  The inflation caused by increasing gas prices may be the larger issue for most people.
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[1] Totally ficticious factoid created for this post.  

 

[BigMoneyJim]

I changed my driving habits at $1.40/gallon 4 years ago, but my motivation was debt reduction and changing cars saved me per-month and total cost. When I moved to Indy I knew no one and little about the area so I picked a place close to work that felt kind of like back home. I'm now hooked on living close to work.

My car gets about 20mpg between home and work and up to 30mpg on the freeway. I could get better mileage but I would save more money changing some other habits first.

 

[Alan]

When I was in England a few weeks ago gas was 90p/litre which is 3.60 GBP/US gallon, which at the exchange rate of 1.8 is $6.50/gal.  Gas in England has always been several times per gal higher than in the USA, and before we came over we naively thought our gas bill would go down.  Wrong.  Even allowing for the fact I drove 25 miles to work as opposed to the 13 miles I used to drive in England, my annual gas bill went up significantly.

Reason being that in England we owned one 1200cc car for our family of 4, and I car pooled with 3 other guys.  Car pooling was the norm, and had been when I first joined the work force back in the 70's. In the US we each had a 3 or 4 liter Truck/SUV and I never car pooled, because hardly anyone did.

These days we each have a compact and I live 3 miles from work.


So I think possibly attitudes will change eventually but it will take gas to be at the $5+ price for a long time.

Reason for the high gas prices in European countries of course is tax - the so-called "carbon" tax.  Europeans wouldn't be so keen on small cars and lower emissions if the governments didn't use the stick and stick approach.  (you should see what the annual road tax is!!)

 

[OldAgePensioner]

During my stay, I drove a used 1.2L Corsa fomerly used by BSM. Got petrol at US prices using Navy coupons. They ran out one month and one fillup on the Brit economy was enough to induce panic.

I never understood how the locals could drive. Even in 2000-2005, it was $5-6 dollars a gallon. Then, I learned that a lot of Brit companies give cars and gas as perks. But what about a pensioner. Egads.

 

[moghopper]

So I think possibly attitudes will change eventually but it will take gas to be at the $5+ price for a long time.

In that respect, I welcome the high prices. I think it is the only way we will effect change here.

 

[Alan]

During my stay, I drove a used 1.2L Corsa fomerly used by BSM.  Got petrol at US prices using Navy coupons.  They ran out one month and one fillup on the Brit economy was enough to induce panic.

I never understood how the locals could drive. Even in 2000-2005, it was $5-6 dollars a gallon.  Then, I learned that a lot of Brit companies give cars and gas as perks.  But what about a pensioner.  Egads.

BSM? - Was that British School of Motoring?  If so I trust you got a good price because to pass a driving test in Britain you have to use a stick shift so I expect those driving school cars had a lot of wear on the clutch.

The goverment has started taxing company cars and other such perks.  They even let you gamble on taxes on gambling winnings.  When you bet on a horse race you can opt to pay the tax on the bet or on the winnings.  Most people choose to pay the tax on the bet to avoid paying tax on their expected windfall.  Of course this nets a lot more money for the IRS than the taxes on actual winnings.  I expect they adopt the same approach on their lottery but am not sure.  I only know about the horse racing because my Dad has always bet on the horses every week.  (gambling is his only vice : - apart from smoking and drinking  )

 

[Honkie]

The average price for a litre of unleaded petrol in the UK now is around 95 pence, which converts to around US$6.60 per US gallon. Much of Europe has similar high prices due to higher taxation (as noted in some posts above) I am currently in Hong Kong where prices are in fact slightly higher at around US$6.70 per US gallon.

US drivers should be grateful that they have always had cheap prices and in comparison, still do, even at US$3.50 a gallon.

Personally, I would put the taxes up to reduce CO2 emissions, which would also encourage a reduction in vehicle and engine sizes and generally encourage more responsible use of resources.

Honkie

 

[tryan]

Saw $3.14 here (north of Boston) ... down from $3.29.

Trend seems to be down.

 

[Marshac]

When you bet on a horse race you can opt to pay the tax on the bet or on the winnings.  Most people choose to pay the tax on the bet to avoid paying tax on their expected windfall. 

That is awesome. The IRS should do this for the Lotto.

 

[BigMoneyJim]

That is awesome. The IRS should do this for the Lotto.

Well, as long as we don't get any new regressive taxes...

EDIT:

 

[Danny]

At what price will we as a nation start to use less? Or is gas (and the transportation freedom it allows) simple not price elastic and we will continue to use it at the same rate no matter what the price?

I read this morning that "Americans used 4% less gasoline amid skyrocketing pump prices last week than they did the week before Hurricane Katrina hit, the federal government reported. But whether that indicates consumers have decided to conserve or merely that they couldn't find all the gasoline they wanted isn't clear."

To me it remains to be seen if this is a trend or if we get used to the new price level and continue on as we were. I know with the price at 2.72 instead of 2.99 last friday it feels like I'm getting a bargain

 

[tryan]

Paid $3.09 today ... down from $3.14 yesterday.

Good sign.

 

[polloloco]

$2.49/gal in MS this week

 

[justin]

In Raleigh, NC, the station on the corner near my office still has no gas for sale. They've been out since last Tuesday. I believe it is 76/Circle K. Don't know what the problem is. Gas is as cheap as $2.89 here in Raleigh now.

 

[tryan]

"(But) I would be very surprised if we didn't see gasoline prices come down over the next six weeks to the $2.60-$2.80 level

Our fearless leader has done something right .... Deregulation at it finest.

http://tinyurl.com/bp57m

edited to decrease size of URL

 

[AltaRed]

Independent stations such as 76/Circle K buy gasoline on the spot market from refineries rather than under firm contract are the first to either run out of supplies period, or supplies at an acceptable price. When gasoline is plentiful, no problem. At other times, no supply.

Also, until the pipelines pumping refined product to the Southeast are back in service, the Southeast will be short. There are no other ways to getting large quantities of gasoline to that part of America. That's the price to pay for all those Floridians, Carolinians, etc who do not want industrial ports on their coasts. The NIMBY syndrome has consequences.

 

[bogart]

AltaRed -- what an idiotic post. NC has two "industrial" ports on its coast, Moorehead City and Wilmington.

 

[astromeria]

Indeed, the port of Charleston is one of the largest on the East coast, and we compete with Savannah for business. Our port is so large, it extends beyond Charleston to North Charleston and to Mt Pleasant (across the harbor). It can take quite a while to turn left from my brother's office due to the huge number of trucks streaming from the relatively small part of the port located in Mt Pleasant.

Charleston's more than a pretty face 

 

[justin]

Independent stations such as 76/Circle K buy gasoline on the spot market from refineries rather than under firm contract are the first to either run out of supplies period, or supplies at an acceptable price. When gasoline is plentiful, no problem. At other times, no supply.

Also, until the pipelines pumping refined product to the Southeast are back in service, the Southeast will be short. There are no other ways to getting large quantities of gasoline to that part of America. That's the price to pay for all those Floridians, Carolinians, etc who do not want industrial ports on their coasts. The NIMBY syndrome has consequences.

Our pipeline to NC is back up, close to 100% of pre-Katrina capacity. And what Bogart said, we have two ports in NC. We also have railroads and interstate freeways that allow freight movement to/from our state. Then there are Virginia's ports.

 

[moghopper]

Our pipeline to NC is back up, close to 100% of pre-Katrina capacity.  And what Bogart said, we have two ports in NC.  We also have railroads and interstate freeways that allow freight movement to/from our state. 

And Aunt Bea. You'll always have Aunt Bea.

 

[Dawg52]

I paid $2.49 over the weekend. Saw one station the same day at $2.73. Hopefully it's gonna stabilize soon. Steve Forbes said on CNBC this morning that he thinks there is a bubble in oil prices and that prices will drop to around $40/barrel over the next 10 months. He's somewhat of a goober but I hope he is correct this time!