Monday, January 18, 2016

Are We Blowing Our Chance To Take Advantage of Cheap Fuel?

FINALLY, I have purchased gas for under $2 a gallon!  Ok, I know what you are thinking; Why is that news? I have been paying under $2 a gallon all year!.  Well, I live on the West Coast where cheap gas is an oxymoron, at least normally.  I paid $1.969 for gas two days ago marking a few weeks under a year since the $2 mark was achieved.  (Feb 3, 2015, I got gas for $1.939)

OPEC has pretty much announced that they will openly fight any transportation option that is does not further the World's addiction to oil and that has allowed us to become complacent. I don't have the specifics of what cheap gas has done to our purchasing habits but can only guess that Full size Diesel Trucks are flying off the lots with their $50,000+ price tags.


This truck is "rated" up to 18 MPG on the highway per the dealership  but get it off the dynamometer and a more realistic number is closer to 12 MPG.  A recent post by a Dieseler crows about paying $1.88 a gallon just a few days ago...

Again without looking, Full size SUVs are probably enjoying a renewed popularity with people blinded by the extra cash in their wallets from fuel savings as well.  I would provide real data but the thought of seeing the sales numbers is quite frankly, very depressing.  

As always, we are essentially making knee jerk purchases based on the highly volatile price of gasoline.  Sure its cheap now and unlike previous dips, it has actually been cheap for quite a while. Ignoring a short period this past Summer, gas has not been close to  $3 a gallon here since October 2014 which may not sound like a big deal to most but remember, our pricing scales are inflated here.  Before dropping into the upper 2's during early Winter 2014, We have been over $3 a gallon (including several forays into $4 gas) for years.  It was then that gas was painful. A significant budget consideration that could not be ignored.

But that was less than 1½ years ago.  How quickly we have become conditioned to again being able to ignore the pittance we now pay for fuel.  So, I guess the real question becomes "At what point does the gas bill no longer becomes a major budgetary consideration?"

Well, now we are talking money. Cold hard cash for the most part.  Like lottery tickets, gasoline is pretty much a "cash in hand" expense. I use credit cards for gasoline purchases (mostly for cash back, points or whatever) but always pay off the balance every month to avoid interest costs so its still essentially cash.   So the threshold of pain runs the gamut from "still painful" to "not sure what it was last month, but it wasn't much" response when asked how much we pay for gas.  Notice when gas is over a certain point that we become acutely aware of how much we pay at the pump but when I ask that question now I get "Oh, its not much... maybe about $10-15 to fill up"  verses high priced gas of  "I paid $36.73 just the other day!"

But herein lies the problem. When gas gets too cheap, we gorge. Now not all gorging is bad.  Taking more trips out of town is actually a good thing that I am in favor of.  Sightseeing or simply "roadtripping" helps to stimulate the economy. You are essentially spreading the wealth around the country which tends to help maintain businesses that rely on travel and this is the segment of the economy that has been hurt the most in the recent past. After all, road tripping pretty much requires stopping to eat somewhere new, right?

But gorging also means making poor choices on vehicle purchases. Unlike family vacations or spur of the moment road trips,  vehicle purchases commits you to several years of living with that decision. This creates a situation I have seen time and time again where people buy a vehicle, the price of fuel hiccups and all of a sudden paying both the car loan and the gas bill becomes very challenging.

What is really needed is ways of making sure that gas does not get too cheap and that can easily be done by simply creating a flexible gas tax structure that changes based on the going market price of gas.  Washington State does it with their minimum wage laws. Every year, they base any minimum wage increase. (Thankfully, its a one way street) on the cost of  living.  Cost of living goes up 3%, our State minimum wage goes up 3%. That way we can at least "tread water."   OBTW; Thank you fuel prices for insuring the cost of living actually went DOWN last year meaning no raise for Washingtonians... first time in YEARS!!)

Fuel taxes should be managed the same way but raising fuel taxes is something that is more difficult that we think. The federal gas tax has not been raised since 1993 while the cost of everything related to transportation has skyrocketed.   Having tire issues with your Nissan LEAF?  Well, before we place all the blame on Nissan for its vendor choices, maybe we should take another look at the deteriorating conditions of  the roads we drive on?

Now when gas when I paid $3.419 for gas on September 28, 2014 it was pretty easy to understand how gas a gas tax increase would have been a monumental achievement, but now that gas is approaching half that coupled with the failing road system coupled with the reduced gas tax revenue??  I mean how obvious does it have to get?

But our legislative body does not work like that. It would be great but it does not. Congress does do "right" or "reasonable" or "smart".   For them its "perfect" or "covers all bases" and if they can't do that, then its do nothing which is what we currently... no, not currently but have been putting up with for decades.  Constantly we get a bill that most can get behind but a single voice of concern can completely stop it in its tracks which means a lot of time and money spent to get nowhere or at best a half step towards a solution that barely visible on the horizon.

So maintaining the price of gas to at least a reasonable level means stabilizing our budget which means that spur of the moment splurges are tempered by the fact that that 450 Horsepower Mustang will always cost at least $100 a month in gas and also aids us when making the family vehicle purchase since we no longer have to worry as much about what we will pay for gas will be 3 years from now.  Now we do need to realize a variable gas tax rate only prevents gas from getting too low and there will always be the specter of  $5 gas that we may not be able to avoid.

So chime in folks!  What is your balance point?  At what point does the price of gas start to affect your life?  Is it $3? 4?  or is it still causing you to go without even now when its just a notch over chump change?

8 comments:

  1. One other upside of the low price of gas is that it helps keep the low cost of used EVs even lower. I've had a Mitsubishi iMiEV (the "Anti-Tesla") for about two months now. I paid cash for it, and even with the low gas prices, the car will pay for itself in just a few years.
    We've also had a cold spell lately (right around 0 degrees F and down to -15 to -20 if you count the windchill...) The family Prius wouldn't boot up. I checked my pickup truck (which has been parked since getting the iMiEV) and the coolant in the overflow tank was frozen solid!
    Although I have been berating the heater in the EV lately, it was the ONLY reliable vehicle in the extreme cold!

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    1. Great story! I also had a relative whose car would not start. I did have a jump box in the LEAF so was able to get enough juice into her car to get it to turn over at least :)

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  2. Yep, low gas prices are just a tax on stupidity. A OPEC bait-and switch that most of the sheeple will react to predictably, making long-term commitments based on short-term pricing. Oh well, it has helped create buying opportunities on used EVs, which will hopefully awaken more people to the other merits of EVs. Regardless, EVen at $2/gallon, my average cost per mile is only 1/4 of the backup gasser (or 1/2 the cost of fueling a Prius). Considering $0.02/mile worth of electricity and $2/gallon gas, it would take a car that AVERAGES 100 MPG to break even against an EV (if you ignore the high maintenance cost of a gasser).

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    1. Preaching to the Choir here, Jay! And that is only the beginning. Even at 1-2 times a month, stopping for gas is such a hassle. It really cannot be combined with anything. The last half dozen times I charged my LEAF publicly, I also grabbed a meal, did some shopping, etc... At the gas station, there is nothing to do but get gas...

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    2. make that "get and release" gas...Ha Ha

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  3. I just got my "fuel saving check" from United Airlines and am expecting one soon from AA..all based upon the miles I have flown even saying that they would soon stop charging for baggage since they did this because due the increase in fuel prices. So nice to see this passed along to the customer!! What..You haven't received yours yet??? Patience my friend. Patience, patience, patience!!!

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    1. well most of my flying is of the corporate variety so don't get any of the kickbacks. I did save almost $90 on the gas bill for the Corolla in 2015 and probably about the same on the home heating bill which is still in progress :)

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    2. And that's good news.

      I remember in the early 80's when American Airlines found it could save something like 3 million a year by just leaving the olives off the salad, it was all downhill from that point on!! Anyway, it will be nice to fly someday without the need to carry my "motormen's friend," and have free access to the bathroom!! Ha Ha

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