Sunday, October 16, 2005

Gas Prices Don't Matter

I wanted to put this up as a classic example of egghead inflation/oil analysis. In this otherwise quality article on petroleum, is this:
One reason that gas prices are not important is that they are a small portion of the cost of driving. The cost of owning a Ford Taurus over its 150,000 mile lifetime is estimated to be $60,000 in purchase price, insurance, repairs and taxes. At $1.50 per gallon, the total cost rises to $71,000, of which only 15 percent is gas. At $3 per gallon, the total cost goes to $82,000, of which 27 percent is gas. The point is that if you want a Taurus, or even a Hummer, the price of gasoline makes little difference in whether you can afford the vehicle.
This is obviously someone who has plenty of money. The difference of a few hundred bucks here and there is no biggie to him. Unfortunately and rightly or wrongly, a very large portion of the population at all income levels lives right up to the limits of their pocketbook. When there is an increase in price, it's a big problem. He then goes on:
Americans buy almost as much gas at $3 per gallon because we need to get to work, to school, to the doctor's or to church, and we can't (or won't) walk or use public transportation. Higher gas prices motivate us to buy more fuel-efficient vehicles, but they don't reduce our gas purchases much until we trade in the current vehicle. The market does react to higher prices, but it takes years.

He then goes on to make my case! Gasoline is not a competitive market for this very reason. The options are few for consumers, thus the cost of energy is critical in determining expendable cash.

These types of rationalizations permeate the elitists Republican types. While selling a bond with the common man, they really hold common people in contempt.


At 3:37 PM, Blogger Lynne said...

No shit.

I live an hour away from my work. I use almost 6 gallons per day. At $3 per gallon, I'm looking at $360 per month.
That's almost 1/4 of my income per month.
I surely do wish that a couple hundred bucks per month was no big deal but it is. And I'm lucky. I make twice what many, many people in this country make.
I would just like to choke the living shit out of these wealthy, clueless people.
*whew*, okay. feel better now.


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