I just don’t get it – what is the big deal about gas prices?

I just don’t get it – what is the big deal about gas prices?

If there is one thing I don’t understand is, how much people care about gasoline prices. If a news story came out today that said tomorrow all gasoline prices are going to jump by 10 cents, there would be lines wrapped around the block waiting to fill up for gas. I mean it would be great if people were actually that concerned about their finances, that the extra $1.20 (12 gallon gas tank) it was going to cost them just was unacceptable, but it’s not it’s something else and I don’t get it.

These are the same people will drive 10 miles to the gas station going 75 mph on the free-way in their gas guzzling SUV to save 10 cents a gallon on their gas and while they are there will pick up a $5 cappuccino, a pack of cigs, $10 worth of lottery tickets, and put the whole thing on their credit card which is at 28% interest and will make the minimum payment when the bill comes next month. People make the absolute worst money decisions in the world and essentially throw away thousands of dollars away on useless things, but when it comes to gasoline prices (something relatively minimal in the grand scheme of things) they act like they are the most frugal person that has ever walked the face of the planet.

Take for example this recent article on Yahoo about how gas prices are on the rise again. You know the same thing that happens every spring as we approach the “driving season” and well you know the oil and gas companies never seem to be able to prepare for this cyclical part of the year and there will inevitably be a gas shortage and gas price increases and it’s going to be damn near impossible for people to survive again. People will be spending all their money on gas and so they won’t shop and the economy will go into a tailspin, companies will go out of business, people will lose their jobs, and stocks will crash. Ok I’m being over dramatic but in one way or another this is what the media portrays every time gas is going to jump 10 or 15%. Maybe it’s because this is one issue that really grabs peoples attention (justifiable or not), but in the end gas prices do rise and nothing happens other than people and the media complaining about it.

If gas prices were actually a significant issue and people really cared that much about it you would see some action to help offset this unbearable burden, but people complain and life goes on as usual. Take this exerpt from the yahoo article as a prime example. What is wrong with this picture?

“”It kills me,” said Gloria Nunez, 53, as she filled her Ford Explorer SUV at a San Jose gas station. Nunez, a clerk for a communications company, has started working a couple hours of overtime each week to help soften the blow. “All of a sudden you kind of have to watch your pennies,” she said.”

Couple observations

She’s driving a Ford Explorer SUV
If gas prices really were that unbearable maybe she’d think about driving something that gets more than 16 mpg. I don’t know her situation, but I’d bet its fair to say that a vast majority of SUV owners, don’t need an SUV. I’ve never been to San Jose, from google maps it looks like there are some mountains and maybe Gloria’s communications company is located high atop the mountains to get better reception, but I doubt that is the case. If I had to guess I’d also bet that a majority of Gloria’s travel is done with only her in the car so the extra cargo/passenger room isn’t really an issue, but I’m sure social status is and what she drives is an issue.

Heck just by switching to a Toyota Camry she could save over $1000 a year with gas at $2.51 according to the EPA. Every fillup she would save $10 and could get an extra 142 miles before she had to fill up again. This is with a family sedan I didn’t even compare it to a small car such as a Corolla. Also add in the fact that she probably paid about $8,000 more for her Explorer vs. the Camry if she bought it new. Also add in the fact that the above calcs assume $2.51 gas, Gloria lives in San Jose where the current average gas price is $3.03 so the extra cost of an SUV is magnified even more.

“..started working a couple hours of overtime each week to help soften the blow”
Now because I don’t know which gas price increase officially put Gloria’s expenses over the edge, lets go ahead and say that gas was $2.75 in San Jose a few months ago, this $3.00 stuff is killing her, and God forbid gas jumps up to $3.25 this summer. A 50 cent increase!! This is going to cost her $9 a week, which I understand is not chump change and does eat into your pocket book, especially if you drive an SUV, but it’s not like she’s going to have to work much more than an extra hour a week to recoup her gas prices. In fact if she just switched to a Toyota Camry she would be saving $23.42 a week now. If gas jumped to $4 a gallon a $1.25 increase from the original $2.75 starting point it would cost her $22.53 extra a week which still is more than it’s currently costing her to drive an SUV versus a family sedan. Gas price increases are pretty insignificant when put into perspective to other costs.

Maybe I don’t get it but to me gas prices are very insignificant. If gas is going up 25 cents tomorrow I’m not going to grab all our vehicles and rush them to the gas station to top them off and save a couple bucks (and I’m about as cheap and frugal as they come). People have no control over gas prices so for me I don’t worry about it and I’ve never felt a tightening of my pocket book because of gas prices. Granted I drive a car that gets 30+ mpg and I live relatively close to work now, but I’d take $5 a gallon gasoline hands down over a lot of things when it comes to dollars and cents (credit card debt, smoking, driving an SUV, etc).

I’m all for saving money wherever you can, so if you want to scour online for the lowest gas prices, and fly to the gas station when you got insider information about a 5 cent gas hike tomorrow all the more power to you, but don’t act like it’s the end of the world financially, especially if you drive an SUV and have other bad financial habits that are going to be much more expensive than $3 gasoline.

  • Nice Post! I have two brothers and we all have bought hybrids over the past 5 years or so as we needed cars, but when someone asks me is it worth it- I say the finances do not really come out ahead of say buying the non-hybrid civic. Depending on how you run the numbers, my take is that it more or less costs the same but pollutes a bit less. The hybrid engine costs a bit more but the extra mileage it only saves you a bit. When you compare the Prius to an explorer, that is a different story.

    You mention that Ms. San Jose is not likely commuting to the top of Mt Iworkhere, but a more difficult and realistic choice is for folks living in areas that get real winters- what 4 wheel options are fuel efficient? If you need two cars, then a hybrid and a four wheel drive option makes sense if you generally only drive one- you can always take the hybrid and then when the snow hits, drive the other.

    But your starting point is the key- be responsible for your own choices.

  • MFJ

    Yeah I agree – I did the math on hybrid vs non-hybrid a about 4 or 5 years ago and it wasn’t even close. Especially if you compare the Honda Civic HX manual transmission which gets damn near close to the same gas mileage as the hybrid but is about $6000 less (again this was 4 or 5 years ago and I’m going off top of my head so don’t quote me)

    As far as real winters. I live in Wisconsin and while yes there is a day or two a year where a big old honkin SUV would be nice, but certainly not necessary.

    Driving in snow is not that bad when you know what you are doing. Front wheeled drive vehicle and common sense make winter driving very reasonable. Besides most of the vehicles in the ditch in winter are SUVs because they think they are invincible. You hit a patch of ice I don’t care whether you are driving an Escort or a Hummer you are going to lose traction and if you are driving too fast just because you got an SUV you are going in the ditch.

  • WEB

    I agree completely. A bit reminiscent of a Dennis Miller rant. It’s great to see some passion, common sense, and bit of sarcasm all mixed into one post.

  • justin

    A big thing people don’t get is the minivan thing. Say you do need the extra room, you can go with a minivan instead and get much better mileage. Cool factor goes down. Or, god forbid, a wagon like I drive. I’m in the process of trading it in, for another wagon… and while the all wheel drive version is nice, the regular version and a good set of snows has been enough to get me through winters in some of the snowiest areas of New York state, costs less upfront, and averages 5mpg better highway.

  • I’m with you too. I bought my wife a Mercury Mountaineer. It gets a whopping 15 mpg. But, I feel like the kids are safe in it. Plus, it drives fine in the nastiest snow storms we get. My dad shook his head at me when he found out we get it (because of gas milage). We actually got it pretty cheap because gas prices had just jumped up a ton right before we bought it. I pointed out that we drive about 10,000 miles a year on that car. so, even at $3 a gallon it only costs us $800 a year more. That’s nothing.

  • Tim

    i wonder what we ever did without mini vans and SUV’s?

    it’s a personal values thing as anything. there are people who will complain but continue on the same path.

    broknowrchlatr, the “feel like the kids are safe in it” is exactly why SUVs are bad as MFJ stated they are always in the ditch. people simply think that an SUV is safer, which is wrong because people driving them contribute that anything they do in the SUV will make them safer. If you’ve ever tried to do an emergency maneuver in an SUV over a car, you’d see that the SUV isn’t safer for the kids. Now there are plenty of people who need the extra room, the extra towing power, etc, but “feeling safer” shouldn’t be a decision factor since that feeling normally means the person is “acting less safe”.

    the gas price is something we all like to complain about. there won’t be any real changes, until gas price are higher. just look at the 80s. gas prices changed people’s behavior in cars. heck, it allowed chrysler to come back from the dead (of course they got a nice govt loan, too).

    i’m not about hybrids simply b/c the “greeness” of them is rather ironic considering what you’ll have to do with the dead cells; however, there aren’t enough of them on the road to worry about that issue yet. plus they do no better MPG in stop and go traffic which the vast majority of the people buying them are in.

  • FMR

    Great post. The best part about Ms. Nunez was that she was working a couple extra hours a week to “help soften the blow”. As if she was taking a $60 per week hit and these extra hours were only making it a $20-$25/week hit.

    In reality… with your calculation of this gas hike costing her about $9 extra a week… if overtime qualifies as time and a half… even if she worked a low-paying $7.50/hr job… overtime would be $11.25. So a couple hours IN ONE WEEK of overtime would completely cover her extra gas expenses for a solid month. And that is if she was paid with a minimum wage job.

  • This right on the money. However, I actually think it’s a good thing that the media is making a fuss about gas prices. The higher the perceived value of gas the more people will (hopefully) start trying to reduce their gas consumption, whether by driving less or by switching to a more fuel efficient vehicle. In addition, the higher the price of gasoline and of oil, the more attractive atternative fuel options become.

    This can only be good for the environment. So, go ahead media, hype it up…

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  • I live in snow weather and snow tires would do me way better than a SUV. Although the space would be nice to go snowboarding. However a minivan is a better option than an SUV, seats more people comfortably, and gets better gas mileage.

    But it’s so uncool. DH and I were arguing about it this weekend, we hate the idea of a minivan but I bet practicality wins out in a few years.

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  • Anne

    @Wylie: How about a Subaru? The Impreza gets 25 mpg combined (manual transmission, which is the only way to drive anyway):


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  • Ryan

    The one thing you don’t include in this is that gas is an intermediate good that is used everywhere. Anything and everything from transporting the food you eat to just transporting the gas. All of this requires gasoline. So, any increase in gas would require an increase in price of all goods. Sure, the immediate effect on consumers at the pump would be small, but as soon as you take in effect the increase of price in all goods, it adds up quickly.

  • Great post. Followed here from Clever Dude. What I will say in her very small defense is that San Jose is NorCal and a lot of ppl have SUV’s so they can spend their weekends skiing in Tahoe. Putting chains on a Honda Accord can be less than thrilling in heavy snows going up to the mountains. The mountains you see on the map are the Santa Cruz mountains, and rarely are they graced by any snow, fog at worst. You hardly need an SUV for that, but an active lifestyle camping, surfing, kayaking, etc, can make an SUV handy out there.

    HOWEVER, having lived in NorCal for many years, I also know she can rent an SUV and drive a small economy car the rest of the year. There isn’t really a need for her to have a truck that size. She can ride a motorcycle and get 70MPG out there and have 90% of the days be perfect for riding, AND SPLIT THE LANE in stopped traffic. (The only state in the union which allows lane splitting, but only in this circumstance.)

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