Monday, June 09, 2008

Gas Price Stress Redux



Not too long ago I posted about gas price stress. Even if your TV viewing is as sporadic as mine, fuel prices are still a topic that no doubt grace your local evening news EVERY SINGLE STINKIN' NIGHT.

For my part, I touched on some of the expected home- and workplace effects of $3-per-gallon gas, and calculated that gas at around $3.50 per gallon might cost an average family about $125 more per month than would $2-per-gallon fuel.

Well, now that our national average cost-per-gallon of fuel has reached four bucks, I wanted to revisit the topic just a bit. And also point you kids toward this nifty CBS news snippet:

CBS News: Oil Prices Expected to Rise

The clip's only a little over two minutes long; the fairly interesting part hits at about the 1:49 mark. It's there that the reporter graces us with this:

And if you think what you pay at the pump is pricey now, just wait: This gasoline [$4/gallon] comes from oil when it was ninety bucks a barrel. Now that oil is almost one hundred forty dollars a barrel, economists say you can expect to see gas top six dollars a gallon. And that's in the next few months.


Now, I will profess that I have no idea how much truth is in that little statement. Drawing a straight-line trip from $140 oil to $6 gas seems a bit tenuous to me, but I suppose it could happen.

In any case, it gives me a fantastic chance to update my Excel-powered "Gas Price Stress" scenario. Let's add the $5 and $6 price levels and see what happens to gas prices for my completely-fictional Average Working Family:

Click to Enlarge


And my hopefully-reasonable assumptions:

Spreadsheet Assumptions


That's an Ouchie

So if gas hits $5/gallon, our fictional family better be ready: Their fuel expenses will almost tag the $418/month mark. And at $6/gallon, they're spending $501 per month.

These numbers look pretty yucky, really, when you see that they were spending just $167 per month back when gas was two bucks per gallon. (Ah, sweet memories.)

The above numbers assume, of course, that our family's driving patterns and habits don't change as fuel prices rise. Something tells me that's not likely.

For me, the striking thing about all this is that I know too many households who won't be able to absorb, say, the $250/month expense increase which $5 gas would bestow. And that doesn't even factor for the price increases in food and other downstream inflations.

For a great many Americans, the picture being drawn here isn't terribly pleasant.

NOTE: You can download my spreadsheet here. Feel free to play with it to your heart's content.

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— Posted by Michael @ 9:20 AM








6 Comments:
 

Number of drivers in family doesn't have any effect - you hard coded daily miles times 4 in cell C4

Anonymous Anonymous
, at 1:06 PM, June 09, 2008  
 

It also doesn't take into account those of us who will likely be sleeping in our cars at work or those lucky enough to find a place to stay in. It will drop our commuting expense considerably.

 

In my family, we have 1 car (a Camry which gets pretty poor mileage). I usually ride the bus to work, my mother usually takes the car. Since our commutes are short and most of my extra driving involves me by myself and no cargo, we bought a pair of scooters that average between 90-100 MPG. Total cost for both scooters was $5,000, insurance is about $100/yr for liability. Can't take it on the freeway, but I can keep up with traffic and get 90 MPG. If your commute isn't too long in the summer sun, it is an attractive investment.

 

@ Anon: I've fixed that little glitch now. Thanks for the heads-up!

@ Teri: Yeah, well I can only take into account just so many scenarios!

@ Russell: I imagine the scooter business is booming these days. In fact, last week a local news station hightlighted an understandably-happy scooter-store owner ... and her difficult task of trying to keep inventory on hand.

 

Indeed; in a period of 3 hours we watched half of their showroom floor empty out. I'm sure this small shop in an industrial strip easily is doing $30-$40,000 each day (when they have stock).

 

I am already paying way too much to get to a job that pays poorly just so I can have health insurance, which I need. It is already insane at $4.15 a gallon. I want to just quit, can't get insurance. I may I have to do it anyway if it gets much worse.

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