Re: Adapting, With Gritted Teeth, to Higher Gas Prices
- From: mg <mgkelson@xxxxxxxxx>
- Date: Sat, 24 May 2008 09:12:08 -0700 (PDT)
On May 23, 2:01 pm, Jim Higgins <gordian...@xxxxxxxxxxx> wrote:
Adapting, With Gritted Teeth, to Higher Gas Priceshttp://www.nytimes.com/2008/05/24/business/24gas.html?_r=1&hp&oref=sl...
Hating every minute of it, Americans are slowly learning to live with
high gasoline prices. For a nation accustomed to cheap fuel, big
vehicles and sprawling suburbs, the adjustments are wrenching.
Cory Asmus of Temecula, Calif., just bought a $4,800 motorcycle for his
20-mile drive to work so he could cut his gas bill to $8 a week, from $110..
Florian Bialas, a retiree who lives near Chicago, sold his 1987 Pontiac
Sunfire for $3,000 and plans to relinquish his license when it expires
in September. “I can walk to most places where I need to go,” he said.
I've noticed that in some countries, the natives are capable of
carrying an enormous amount of weight on top of their heads. If
Americans were to practice this technique and slowly increase the
weight over time, I'm confident we could carry just as much that way
as anybody else.
In fact, one thing we could do that those other countries don't, is
put an American flag and a Bible on top of those bundles we carry on
our head. That would serve as a warning that we are willing to
continue killing Islamofascists no matter how long it takes and no
matter what sacrifices we have to make.
And Debbie Gloyd of Cleveland has parked her Chrysler Concorde and
started taking the bus to work. “I can’t afford these gas prices,” she
said. “They’re insane.”
With the nationwide average price for regular gasoline closing rapidly
on $4 a gallon, people are bracing for a summer of pain at the pump.
As the Memorial Day holiday approaches, kicking off the summer driving
season, the record prices are provoking dread and upsetting some
people’s vacation plans. A recent survey by AAA, the automobile club,
found a rare year-on-year decline, of 1 percent, in the number of people
planning to travel this summer.
Interviews with more than 70 people across the country suggested that
the adjustments they were making, mental and otherwise, would last well
beyond the summer. Americans have started trading their gas guzzlers for
smaller cars, making fewer trips to the mall and, wherever possible,
riding public transportation to work.
For years, it was not clear whether rising prices would ever prompt
Americans to use less gas. But a combination of record prices, the
slowing economy and a tight credit market have beaten consumers down.
Gasoline demand has fallen sharply since the beginning of the year and
is headed for the first annual drop in 17 years, according to government
estimates.
The Transportation Department reported Friday that in March, Americans
drove 11 billion fewer miles than in March 2007, a decline of 4.3
percent. It is the first time since 1979 that traffic has dropped from
one March to the next, and the month-on-month percentage decline is the
largest since record keeping began in 1942.
High gasoline prices, plastered on 20-foot signs from coast to coast,
are turning into a barometer of the country’s mood.
“The psychology has changed,” said Sara Johnson, an economist at Global
Insight. “People have recognized that prices are not going down and are
adapting to higher energy costs. It’s a capitulation.”
Typically, gasoline sales rise ahead of Memorial Day weekend. But
gasoline sales dropped nearly 7 percent last week compared to the same
week in 2007, according to an estimate by MasterCard.
Gasoline prices almost always rise in the summer, as demand increases.
On Friday, gasoline prices reached yet another record, a nationwide
average of nearly $3.88 a gallon. That figure was up 4 cents in one day
and is 65 cents higher than this time last year, according to AAA.
Diesel hit $4.65 a gallon on Friday, up $1.73 a gallon in a year.
The driver behind high gasoline prices is the high price of oil, which
is being driven up by soaring worldwide demand. Oil reached a new record
above $133 a barrel this week, nearly five times as expensive as it was
five years ago.
All this has led to a massive transfer of wealth from American drivers
to domestic and foreign oil producers. Every one-cent increase in
gasoline prices means Americans pay $1.42 billion more a year for gas,
according to Stephen P. Brown, an economist at the Federal Reserve Bank
of Dallas. Nearly two-thirds of that goes to foreign producers.
In the first four months of the year, Americans spent $158 billion on
gasoline. In 2003, just as oil prices started to take off, they spent
$88 billion over the same four-month period, according to Michael
McNamara, vice president of MasterCard’s Spending Pulse, an indicator of
weekly gasoline sales.
Whether today’s high costs will translate into a permanent change in
behavior remains to be seen, of course. The Energy Department expects
gasoline sales to fall by 0.6 percent this year, the first drop since
1991, but it expects consumption to rebound in 2009 as the economy
strengthens.
Still, analysts point out that the pain induced by today’s prices is
getting close to the level reached during the oil shock of the early 1980s..
Americans spend 3.7 percent of their disposable income on transportation
fuels. At its lowest point, that share was 1.9 percent in 1998, and at
its highest it reached 4.5 percent in 1981, said Ms. Johnson of Global
Insight.
Still, despite the rise in energy prices, gasoline remains cheaper in
America than in most industrialized countries. In France, for example, a
gallon of gasoline costs about $7.70 at today’s exchange rates. Also,
Americans pay less to drive a mile today than they did in 1980, once the
impact of inflation and gains in fuel efficiency are taken into account,
said Lee Schipper, a visiting scholar at the transportation center of
the University of California, Berkeley.
Mr. Schipper estimates that the cost of gasoline per mile traveled will
be about 15 cents this year. That is nearly three times the low of 5.6
cents a mile reached in 1998, when fuel efficiency peaked and prices
were at their lowest. But it is still cheaper than the record paid in
1980 of 17.1 cents a mile, adjusted for inflation.
The oil shocks of the 1970s and 1980s introduced the nation’s first
efforts to curb consumption, including the first fuel standards and
speed-limit laws. These had an impact on gasoline demand, which fell
each year from 1979 to 1985. But then oil prices collapsed, political
pressure evaporated, and many consumers lost interest in small cars.
“This is the wake up call,” Mr. Schipper said. “We actually have a lot
of choices, based on what car we drive, where we live, how much time we
choose to drive, and where we choose to go. But you have built in a very
strong car dependency. And when the price hits the fan, people have a
hard time coping.”
For many people, higher energy costs mean fewer restaurant meals,
deferred weekend outings with the kids, less air travel and more time
closer to home. Big box retailers are suffering as customers balk at
driving to the mall, airlines have slapped on steep fuel surcharges and
carmakers have seen their sales slump. On Thursday, the Ford Motor
Company announced production cuts because of sharply lower demand for
sport-utility vehicles and pickups.
In Los Angeles, Ron Lowe and his wife, Patricia, spend more time at home
on weekends, hanging out and barbecuing. They are also more likely to
leave their house together now, scheduling fewer car trips and bundling
their chores to cut the gas bill.
“If I go to the grocery store, and the mall and pick up some
prescription, I do it in one shot,” he said.
As gasoline prices have risen to record highs, consumer confidence, as
measured in surveys, has fallen to its lowest level since 1980.
“The whole gas price situation makes me so angry,” says Lissa Nash, 39,
a single mother struggling to raise her two sons on a modest nursing
assistant’s salary. To make ends meet, she has started working extra
shifts at a suburban Chicago hospital, picking up whatever overtime is
available.
“Rising gas prices end up hurting working, lower class people like me,
who can’t afford it anymore,” Ms. Nash said.
The higher costs ripple through the economy in unusual ways. In Round
Lake, Ill. $3 still buys a wriggling tangle of night crawlers in a
dirt-filled Styrofoam cup. But Marty Badegian, the 72-year-old owner of
the Red Worm Ranch Bait Shop, says he might have to raise prices after
his vendor slapped him with a $5-an-order gas surcharge.
“The gas prices are killing us,” Mr. Badegian said.
On a recent sunny Sunday in Encinitas, Calif., Ryan Andrews, 23, and
Tara Driscoll, 21, arrived at the beach red-faced and sweating from
riding their bicycles in 80-degree weather.
They had bought their bikes the previous week and had just cycled six
miles from home. Ms. Driscoll said she got the bicycle so she could ride
to work every day, a commute of two miles, instead of driving.
“It just makes sense,” she said.
At Sim’s Bowling Alley and Lounge, in Des Plaines, Ill., Robin
Sebastian, 51, who tends bar there, sounded bitter the other day after
recalling that she had just paid $46 to put half a tank in her 1994
Buick Regal.
“There are too many politicians’ hands in our pockets, and too many
crooks in the oil companies,” said Ms. Sebastian, an Army veteran who
served in the Persian Gulf. “I’m all for helping other countries, but we
need to help our people here in the U.S. first.”
--
Civis Romanus Sum
.
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