May 15, 2006

Gas Prices And Adjusted Expectations

$3.09/gallon this afternoon at my local "bargain" gas station. Eh, what can you do? Drive less, sure. But how much less? I don't think I drive all that much to begin with.

Oddly enough, despite the pain of filling up SUVs are in higher demand than ever. These huge vehicles keep sucking down gas at alarming rates but it hasn't stifled America's desire to drive them. Doesn't this kind of fly in the face of logic? Not if you consider that fact that most drivers seem to be getting used to the new price level. According to a Newsweek article today, $3.00 or more per gallon doesn't send shudders down our spines the way it used to.

Detroit once thought $3 gas would be our ultimate pain threshold, forcing us to finally give up the keys to our big rigs. But it turns out our oil addiction is harder to kick than anyone expected. Although pump prices have nearly doubled in the last three years, we're driving more than ever. Today's cars average 12,190 miles on the road annually, up 24 percent from 1980, according to federal statistics. And the models we buy now have more horsepower and heft than those of a generation ago, which explains why gas mileage is headed in reverse. Today's new cars and SUVs average just 21mpg, down from 22.1mpg in 1987. When it comes to paying up at the pump, Americans have proved they can rationalize just about anything. "When prices are lower in June," says energy analyst Tom Kloza, "people will brag, 'I got my gas for only $2.75'." Now Detroit is recalibrating its threshold. The new CW: "Prices have to get to $4 and maybe even higher—and stay there for at least a year—before we'll see a substantial shift in what we drive," says J.D. Power's Tom Libby.
Before Katrina hit last fall, people payed on average just over $2.00 a gallon (let's say, $2.25 for argument's sake). A fill-up would go for about $30-35. Nowadays it's more like $45-50. So let's say, on average, we're paying $10-15 more a week (or $40-60 more a month) on gas. It looks like we, as Americans, have found out we can make up this amount by "sacrificing" other things that aren't all that important to us. Think about all the little things you routinely spend small amounts of cash on - a breakfast sandwich, a bottle of water or soda, candy or gum, a bag of chips with lunch, a video rental, impulse-purchases in the supermarket, a Dunkin' Donuts Smoothie or an Iced Coffee. There are lots of little "rewards" that we give ourselves all the time. These are nice-to-haves. Gas is something we need to have. It sucks to have to pay more for it and there'll still be plenty of bitching to go around.

But it seems that our overall expectations - not to mention our lifestyles - have changed to the point where rising gas prices don't seem to affect us as much as we thought they would. Or maybe I'm totally off the mark.

There's currently a poll in the sidebar about how gas prices are affecting your behavior (if at all). Take a scroll over and register your vote.

Posted by: Gary at 02:00 PM | No Comments | Add Comment
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