Thursday, May 08, 2008

 

Feeling the pinch of gas prices

How do you tell if people are feeling the pinch of gas prices? Instapundit says "I'd believe that people were feeling the pinch of gas prices when they started driving more slowly." I usually agree with Instapundit but in this case, he's way off base. For most of us, slowing down will be close to our last resort.

My round trip to work and back each day is about 125 miles with most of it open highway with a 55 mph speed limit. I try to stay around 62-63 mph. By coincidence, this may the the speed at which my car gets its maximum fuel efficiency. However, for the 5 miles of interstate I drive, I crank it up to 75 mph.

How do I save money to make up for the increase in gas prices? My first move was to eat out less. If I drive slower and get another 1-2 mpg, I save 50 to 60 cents on my trip to work and back. If I don't eat out for lunch, I save $5-$6 or more in one meal packed from home vs. a restaurant. By taking the kids out less, I save $15-$20 or more per dinner.

The article linked to above does mention that some people are slowing down, maybe just not on I-40/75 in Knoxville.
Based on recent highway traffic volume trends, throttling back to 60 mph from 70 mph would likely reduce gasoline usage between 2 percent and 3 percent, which is about what happened when the 55-mph limit was imposed in the 1970s, said David Greene, a senior researcher at the U.S. Energy Department's Oak Ridge National Lab.

"We're talking about a 2-to-3 percent reduction in demand, which would mean a much larger percentage reduction in price, maybe 10 percent," Greene said.
Two things are wrong with Mr. Greene's observation. First, cars in the 1970s were in large part carbureted, fire-breathing, V8 behemoths. Today's cars are fuel injected 6 and 4 cylinder engines which already operate much more efficiently than the typical cars of the 1970s.

Secondly, a 2-to-3 percent reduction in demand in the U.S. may not mean a reduction in price at all. The oil market is a global market. Much of the increasing demand is in China and India and it's not likely to slow down soon.

Truckers are taking steps to conserve fuel, including slowing down.
When long-haul trucker Rusty Wade pulled his rig into a Missouri truck stop recently, he noticed something strange.

Of the 50 or so 18-wheelers parked in the lot, only five had their engines idling.

"That's only because of the high price of fuel," said Wade, an independent owner-operator from Brundidge, Ala. "A year ago there would only be about five that weren't running."

But with diesel fuel at more than $4.20 per gallon, Wade not only shuts his engine down to save money. He's also cut his average road speed from 60 to 56 mph.
How bad is the pinch of gas prices? From the same article:
And with good reason. The soaring cost of core essentials like gasoline, food and housing now account for 57 cents of each consumer dollar spent. That leaves Americans with a record-low 43 cents out of each dollar for discretionary spending, according to new figures from Wachovia Economics Group. That helps explains why new vehicle sales in the U.S. are at a 10-year low and why consumers are buying less clothing, shoes and big-ticket items like furniture and computers. With inflation up 3.2 percent from last year and wages stagnating, consumers are undoubtedly girding for a severe recession. The squeeze has forced small businesses to be more creative as well.
Since last year, egg prices are up 30 percent. Milk and cheese have increased 13 percent. Prices for wheat, soybeans, and corn have jumped 60-to-80 percent since last year on the Chicago Board of Trade, driving up the price of cereal, bread and other products.

Bread for the City, a Washington, D.C. food pantry, has already had 10,000 more visitors than last year and Lewis is one of the new ones.
One of the reasons for higher prices for wheat, soybeans and corn is the use of crops and cropland for ethanol production. A big thank you to our geniuses in Congress for our poorly thought out energy policy.

Last night, I saw a story on a cable news network on how people were buying older 4 cylinder vehicles to help offset the cost of gas.

Unless I become an obsessive compulsive freak, slowing down will be a last resort and a very poor measure of the impact of higher gas prices.

The real question is will our officials in Washington get their heads out of their proverbial butts and develop and implement an intelligent energy policy which includes increased domestic drilling, refining and biofuels that don't make food more expensive, such such as algae based bio-diesel.

Comments:
I lived in Johnson City for many years, and traveled through Knoxville on a regular basis, for destinations west and north as well as in Knoxville itself.

If you weren't going at least 80 while traveling through, people would run right up your tailpipe in an effort to get you to speed up.

I don't see that changing any time soon. You haven't lived until a blue hair cruises by you at better than 80, and gives you a dirty look because you're a slow poke.
Humor!
 
Yeah! Going too slow can be as dangerous as going too fast. In Cincinnati they will ticket you for going too slow in the Interstate.
 
We could also start importing Brazillian ethanol (made from sugar), open up trade with a major sugar producing island nation to our south (when their leader kicks the bucket) and make our own sugar ethanol from those imports. Just a suggestion.

I don't know of ANY large port facility, maybe located on the Mississippi River near some industrial and refining capacity, that may be able to handle such imports...
 
I use the K&N air filter on my Nissan. I also use Mobil synthetic motor oil and high quality oil filter, with Amsoil synthetic automatic transmission fluid in the transmission.

In my opinion, from conducting my own tests, the results are two fold.

1. The efficiency of my vehicle(s) rises to the point these fluids and filters become 0 cost over their extended lives before changing for fresh.

2. The life of the vehicle is extended. Trouble and maintenance is reduced.

Keep your vehicle in the garage between uses, and it also maintains its looks as well as lasts, longer. Not to mention doing the above is cheaper than a car payment.
 
Pat - If I heard right, even Ray Nagin recognizes which city that is!!

br549 - I use synthetic blend most often. My son uses synthetic. I can't keep my car in the garage because his project car is in the way.
 
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