Sunday, July 20, 2008

More on gas and gas prices


I realized my lack of sympathy for the common worker who believed that he could no longer afford to drive to work, but in thinking about the real effects of the overall gas price increase and the side effect of the increase in food prices, there are those who are really adversely affected. High food and gas prices inordinately affect the really poor, all those on fixed incomes, and those who live on meager incomes, like social security. A true measure of a society's worth is the manner in which it treats its poor. High gas and food prices grind the face of the poor. The poor have no recourse, they have no options, they cannot drive their other car instead of their truck. They cannot drive less on optional trips because they have no optional trips. They certainly cannot buy a car that gets better gas mileage. In our society, the poor already live without and an increase in food prices coupled with increased energy prices, mean less to spend on food and medicine. Many of our older citizens have seen falling housing prices eat into their only major asset. Now, with higher inflationary food and fuel prices, they may be forced to the limit of their ability to survive.

America is a land of opportunity, unless you are poor, old and infirm. Here is what we think about poverty:

Poverty Thresholds 2006

Poverty Thresholds for 2006 by Size of Family and Number of Related Children Under 18 Years






Size of family unit

Weighted











average











thresholds










One person (unrelated individual)....

10,294










Under 65 years.......................

10,488










65 years and over....................

9,669










Two people............................

13,167










Householder under 65 years...........

13,569










Householder 65 years and over......

12,201










Three people..........................

16,079










Four people...........................

20,614










Five people...........................

24,382










Six people............................

27,560










Seven people..........................

31,205










Eight people..........................

34,774










Nine people or more...................

41,499










Source: U.S. Census Bureau.


As you can see, it is literally impossible for anyone living at the poverty level, or below to afford to drive as much as I do each year. The cost of gas would literally be almost half of their annual income per person. This is a striking statistic. Poor people cannot afford to drive to work. What are we going to do about it?

Phoenix is a modern city in the desert. It is a clean, well run and progressive city. It is also almost impossible to live here without transportation. Although there are a lot of shopping centers, they are just that centers. I live in a neighborhood in east Mesa and the nearest store is more than a mile away, although you might get the impression that the city was full of stores. Phoenix has public transportation but who can stand or sit in the sun when it is 115 degrees in the shade waiting for a bus. Many other cities have the same problems, it may be impossible to sit or wait when the temperature in below zero. A car is not a convenience it is a necessity. Does that mean you cannot be poor and live in Phoenix? Maybe that is what it means.

More commentary later.

Saturday, July 19, 2008

Gas Prices, Gas Crisis?


I live in the Phoenix/Mesa Metroplex. I was listening to an in depth news/talk radio station report on the gas crisis. You know, about fifteen seconds of commentary and two or three common citizens giving their viewpoint. One comment caught my attention. Obviously, one of our upstanding and hardworking citizens, said about the rising gas prices, “I can’t afford to drive to work anymore.” That thought intrigued me. What did he really mean by saying he couldn’t afford to drive to work. Did he mean that the cost of gas now exceeded his income? And that by driving to work, he was losing money? If so, I could only wonder how much he made and how far he had to drive.

At the time of this writing, gas has come down a little in price and hovers around $4.00 a U.S. gallon. I have been driving the same Chevrolet Silverado Pickup for about nine years. I keep meticulous gas and mileage records. The truck gets, on the average, year after year, 14 miles per gallon of gas. I also drive, on the average, 18,000 miles a year. Simple math. At $4.00 a gallon, I would spend, in an average year, $5142.86 for gas. At $2.00 a gallon, which we haven’t seen for quite a while, I spent half that amount, or $2571.43 a year for the same amount of gas. I would assume that the guy who said he couldn’t afford to drive to work, could afford to drive to work at some point in time, or he probably wouldn’t have taken the job. So, I now spend about $2600 more a year in gas than I did a couple of years ago. But, wait a minute, I also need to look at the inflation rate. For this I use a handy Inflation Calculator at http://www.westegg.com/inflation/infl.cgi I just chose an arbitrary date, say eight years ago in 2000. The Inflation Calculator is a year behind but it says that what cost $2500 in 2000 would cost $3084.37 in 2007. Historical gas prices come from the Energy Information Administration of the Department of Energy of the U.S. Government. See http://www.eia.doe.gov/ It turns out that the average cost of gas hit $2.00 a gallon or more in 2004. In 2000, the average gas price was about $1.60 a gallon. Back to the Inflation Calculator, $1.60 in 2000 would be about $1.97 in 2007. Probably more in 2008. So about 30 cents of the increased cost of gas from 2000 to 2007 is overall inflation. Put another way, our $4.00 today would be the equivalent of $3.33 in 2000. So the price of gas has grown faster than inflation, but part of the increase in the dollar cost is inflation.

OK, so what about our guy who can no longer afford to drive to work. Let’s assume some things, like he drives across Phoenix to work each day, five days a week. It is about 40 miles from Mesa, Arizona to Glendale, Arizona or vice versa. That would be 80 miles a day or 400 miles a week. By the way, if you live in Mesa and drive to Glendale everyday to work or the other way around, you should seriously consider moving. The gas cost is only a small part of the driving experience in Phoenix. Now, back to our average or not-so-average citizen. Four weeks worth of driving would be 1200 miles a month or about 20,000 miles per year (giving two weeks off for vacation). Hey, wait a minute, that is about my average driving per year! So this hypothetical citizen is spending about what I spend each year for gas. So let’s look at his now astronomical expense for gasoline. Adjusted for inflation, he is spending about $1,500 to $1,700 dollars more a YEAR than he was spending in 2000. Let’s say he stops at his local convenience market and buys a large soda every day, about $2.00. He is spending about $600 a year for soda alone. I could go on an on. Let’s say he does what I did and buys a Toyota Prius which gets about 46 miles per gallon in real life. My savings over the Chevy Truck at $4.00 a gallon add up to more than $3000 a year just in gas savings. It is like rolling gas prices back to 2000 or before.

The point? There are a lot of options to high gas prices, some may be feasible and some not, like moving closer to work, working more from home, riding a bike or walking, buying a higher mileage car, driving less on optional trips, consolidating trips, sharing a ride with a co-worker, riding the bus and on and on. I don’t think that news accounts that give a ten second comment that someone can no longer afford to drive to work are realistic and are quite annoying. Maybe the guy just needs to stop buying drinks at the convenience markets?