"They" say that the amount of money spent on gasoline by the "average" American this past April was $368. Last April (2010), it was $281. And two years before that, April, 2009, it was $174.
The story makes is sound like the $368 this year assumes that you spent nothing on gasoline last April or the April before that:
Round-trip airfare from New York to Los Angeles. More than a dozen dinners for two at Applebee's. Two 16 GB iPod nanos.
These are just a few of the things you could have bought if you weren't spending $368.09 a month on gasoline.As Al Gore would say, there are two inconvenient truths not noted in the article.
The first inconvenient truth is the delta, not the actual amount of money, being spent on a monthly basis, in an article like this.
The delta is $87 (this year vs last year), about $20/week, about $3.00/day, about one coffee and a donut at Dunkin' Donut.
The second inconvenient truth is the general state of the economy. We were in a severe recession back in 2009, perhaps the worse in modern times. Unemployment was very, very high, and coming up with $175 a month for gasoline when one is unemployed is a bit tougher than coming up with $370 when employed. And, again, it is the delta that is important.
The price of oil has fallen back from its recent highs and it looks like the price of gasoline should drop just before we go into the summer driving season.
The delta of $87/month works out to about $1000/year, about what the delta would be in higher taxes had the Bush tax breaks not been extended. Just saying. Taxes are a much bigger expense than gasoline for most Americans. And if not taxes, FICA withholding for those who do not pay any federal income tax.
About $60 of the $368 spent on gasoline last month went toward taxes on gasoline at the pump. The indirect cost of government regulation and corporate taxes brings the cost up significantly. And, finally, if you bought all your gasoline at an Exxon station, XOM made a profit of about $2.10 on that $368 spent for gasoline.
The last paragraph of the CNN article:
The only other region where drivers spend less income on gas is Washington D.C., where the average household spent just $89 on gas in April, or about 2% of total income.Perhaps that is why Congressmen and the administration do not feel our pain. Just 2 percent of the annual income of Washingtonians goes toward gasoline. Incredible. Remember, this is data provided by CNN, not FOX.
I'm sure the % spent on gas is even higher once you factor in how much extra we pay for food transportation costs when gas prices are higher.
ReplyDeleteI'm interested to know what your solution would be. If we removed all taxes on gas what would be your source for funding roads?
I know I don't have the answer.
With regard to solutions, that would be too much to handle in the comment section. Having said that, with regard to taxes at the gasoline pump, those taxes should have been higher all these years and increased on a regular basis. The regressive nature of those taxes could have been addressed by tax credits (credits, not deductions).
ReplyDeleteThe purpose of the post was to highlight what I hear all the time: the price of oil and the cost of gasoline without putting price/cost into perspective. The delta is important (as noted in the post $87/month does not get me excited) and the state of the economy and/or percent of income spent on gasoline (also doesn't get me excited -- one of the great bargains in this country).
A delta of $87 equals one meal out a week at a "nice" restaurant for four (without beverages). In Washington, DC, maybe for two or three, depending on the restaurant, again hardly a hardship.
While looking for links, I was astounded to see the differences in percent of income spent on gasoline across the country.
With regard to the "extra" costs associated with food, there is another reason for the very high price of food in Washington (and Los Angeles, for that matter) which I won't go into -- again, too much for a comment section.
Thank you for taking the time to comment.
Food (restaurant dining) is high priced in washington because so many diners are on expense accounts so they aren't spending their own money. I wouldn't say restaurants in la are "expensive" the prices in la are more targeted toward tourism and leisure. A lot of so cal culture revolves around food and nice restaurant atmosphere. No one that I know in so cal complains about restaurant prices.
ReplyDeleteWonderful irony in the low Washington DC figure. That said, I suspect that this is for the total of all DC households. Inside the formal boundaries of DC there are a lot of relatively poor people and a some highly affluent. A lot of land is held for speculative development with old housing. (the US Supreme Court adjoins a "bad" neighborhood. Some welfare, drugs ect. but also a lot of support people like custodians and low level clerical people, rent a cops and such. Hard to keep a car in one piece there and they do not have parking at work.
ReplyDeleteThe newer DC housing is very pricey, especially with secure parking included and a parking spot
on "capital hill" can run upwards of one-thousand dollars per month. (You might recall from way back Clarence Thomas had a reserved parking spot at EEOC and Education. Anita Hill would often hitch a ride home with him because she lived near him rather than take public transportation. Also, formal DC is relatively small so a DC resident, working on "Capital Hill" with parking on both ends wouldn't have much of a drive.)
That said, the "ruling class" in DC can be clueless to the effects of fuel prices on regular people. In the last run up I saw the CEO of Wal Mart saying gasoline costs were hurting Wal Mart sales (because people had to feed their vehicles). I still recall John McCain acting perplexed when asked during the election campaign if high gasoline prices were hurting people.
There are definite price increase due to higher fuel costs. As one example my local Aldi's always had bananas for $0.39 a pound. For a few months they have been $0.44.
One bright spot has been the low cost of natural gas versus the last gasoline run up. My nat gas heating costs were quite reasonable last winter. Mobile petroleum heating fuels like propane and heating oil were a totally different story.
To "anonymous" regarding restaurant prices in southern California:
ReplyDeleteYou are correct. I spend several months/year in southern California -- I never complain about restaurant prices. They are unbelievably great.
In my comment, I said "food" -- and was referring to groceries, not dining. Sorry for the confusion.
Groceries are generally 50 percent to 100 percent higher in Los Angeles (specifically San Pedro, Huntington Beach, Torrance) compared to groceries in San Antonio. And as noted, it is not the cost of oil/price of gasoline that drives the grocery prices in Huntington Beach vis a vis San Antonio.
To make sure we're not getting too far off-topic here, I still feel gasoline is one of the best bargains we have in this country. We are very fortunate. In fact, food (groceries) is also a huge bargain in this country.
These things need to be put into perspective, a point I was trying to make in the original post.
I have no complaints.
To Greg regarding Washington, DC: you are absolutely correct. It is easy to manipulate statistics, another reason why the CNN article needs to be put into perspective.
ReplyDeleteWith regard to bananas: In San Antonio, the "usual" price is 44 cents/pound. Rarely do they get as high as 66 cents/pound. Sometimes I can get them for 39 cents/pound. It appears the corresponding price for bananas in the Boston area is about 79 cents/pound (the "usual" price). I could be wrong on that since it may be a seasonal thing, but if correct, it is not the cost of energy that accounts for the 35 cents/pound difference. We all know the unspoken reason.
Oh, as long as we're comparing prices, I finally broke down and bought a Trek bicycle that I could afford. I bought it for under $500 in high-end bicycle shop in San Antonio.
Down the street from where I stay when in Belmont/Boston (Massachusetts) the "same" bike shop sells Trek bikes and other brands ranging in price from $1,500 (rare) to $3,500 (common) to $9,000 (rare). Hundreds of bikes at the $3,500 price. They had only three "stripped-down" bikes selling in the $420 range. I can guarantee you that the price difference and options provided had nothing to do with the cost of energy.
I live in the perfect Minneapolis neighborhood for bicycling where I can make a 25 mile trip with few hills and few cars. I have had a bicycle blog for twelve years and have never understood the high-end name bicycle thing.
ReplyDeleteMaybe it is me. Target had a $300 Aluminum dual suspension bike marked down to $200. I'll say I am rather "large". It took me three years to wear out the back alloy wheel. I replaced with a heavy mountain bike steel rim wheel for $20. 95% of so-called "mountain bikes" spend 95% of their time on pavement.
Fresh food prices are the best indicator of energy cost pass through.
My thoughts are right in line with yours regarding high-end bikes. And that's why I waited so long before I finally broke down and bought a $400 bike, which is as high-end as I will ever get.
ReplyDelete"Fresh food prices are the best indicator of energy cost pass through" makes complete sense -- due to the time/spoilage issue.