This time last year when we were setting our budget based off of Craig‘s new teaching position, we estimated $300/month for gasoline for two vehicles. This was more than enough and often we had $50 or more left over in that category (which quickly got absorbed into grocery money). When I got us caught up last week after taking a two-month break from balancing the checkbook, I noticed that we’d been spending $400/month on gasoline due to the increased prices.
I’ve never before considered rationing the amount of trips based on how much gas money we budgeted for the month, but it’s beginning to happen now. We cancelled a Florida vacation this summer simply because of the cost of driving there and back. When we filled up last week, our goal was to make it one whole week on those tanks – and we made it, but it was close. Even still, filling two cars up once a week every week is going to be more than $300/month – closer to the $400 a month we’ve been averaging lately.
Craig mentioned today that he heard a story that gasoline could reach $12 a gallon. Seriously? Do I just have my head in the sand here? Why in the world is gas predicted to reach that high? And if/when it does, what is our response?
For sure it means not driving as much anymore, but realistically what do we cut out? The girls won’t be going to the two-day school anymore, which will save four one hour drives each week (it took about 25 minutes to get there, 25 to get back, and I did this twice each time they went to school; if I was the lunch helper, I did it three times on that day). Craig is obligated to drive to work (that’s a non-negotiable), though we can maybe do better about trying to set up a carpool with nearby teachers.
I’m wondering if $12 gas (or let’s be honest, even $5 gas) will make things like the bus or Metrolink raise their prices, too. Yes, I considered parking the van in the garage and locking it in there for a while and taking the bus everywhere. My problem with that is that it would cost us 5 or 6 tickets every time which is almost as, if not more, cost-prohibitive than driving.
I can figure out that we need to say no to extras, but what about the things we consider non-extras? When do we say we can’t afford to drive to the grocery store, to the doctor, to church, to see friends? Will it come down to filling up the van one time each month and that’s it – when it’s out, it’s out?
I’m know I’m not the only one feeling this pinch. What are the rest of you considering regarding these projected (and real) increases at the pump?
Half-Pint House 
I heard the projected $12/gallon, too. That seems extremely high to me. I remember regularly paying under $1/gallon for gas back in 1998. I don’t think it lasted long, but that’s still a huge difference from what we’re paying now, just ten years later.
I think we’re going to have to start consolidating trips to Target, the grocery store and the like. We make at least one trip each week to get just a few items — milk, diapers, etc. I’m going to have to plan better and stock up. (We only have one vehicle, which you would think might help — but in Houston, even a trip to the store is a good 20 minutes one way.)
Other than that, I’m just not sure. Gas prices are ridiculous.
Any word about the house (since your last update)?
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We are so glad we went down to one car when we came to seminary. I know this is not doable for you guys, but driving a Civic which gets 36+/gal. on the highway and 25-30/gal. in the city has really helped.
When we were in Italy on our honeymoon two years ago, gas was $4/liter, which is roughly $15/gal. in our terms. I thought it was high, but the cars over there are so much more fuel efficient. We drove about 200 miles on half a tank, and it cost us only like $30 total in gas.
I don’t think it will get as bad as Europe, but it could. As I understand it, only about 40-60% of the cost of gas at the pump is actually the oil price itself. The rest has always been explained as supply/demand, but that doesn’t account for the dramatic increase in prices. I heard on the Today show a good explanation: investment problems. Investors have typically chosen to invest in oil because it is a solid industry. But precarious times have caused many of them to pull back, and so to compensate for the loss of investment income prices have increased sharply.
Of course, the real question is how Exxon-Mobile is still able to post a $10B profit (after expenses) in such times. I am all for capitalism, but not gouging. In a recent Congressional Panel, one oil exec went as far as to say that their company could make a profit on 50% of the average current price. Nice.
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There is a sense that we’re too addicted to our “freedom” afforded by vehicles. Sure, it’s convenient to run a couple of vehicles and fill both up once a week (I filled up more than that when I was in St. Louis, mostly due to a four days of commuting from U-City to Wildwood each week). But to what extent is this a part of the American entitlement mindset?
St. Louis isn’t known for its stellar public transit system, but that’s still better than breaking your budget for gas. Public transit works on a slightly different economy: though the gas prices go up for buses too, the increase in (paying) passengers offsets much, if not all, of the increase. Plus, heavier use of public transit eventually results in improvement of the system, which means that if gas prices remain high then you might see the system get better while you’re there. Public transit has other merits too, including reducing stress (by not inducing road rage, etc.), exposing you and your family to an interesting variety of people (one friend rode the bus to seminary twice a week for a semester so he could meet unchurched folks), and environmental benefits.
There’s also the option of investing in vehicle options that will save gas. Hybrid cars are getting plenty of press, and for good reason: with gas prices on the rise, the cost difference for a hybrid is one its way to being a moot issue. I calculated that, conservatively, my mother would pay off the difference in gas savings in less than two years (she drives a lot). As gas costs rise, this will drop. There are other gas-efficient options as well. The scooter that I drove in St. Louis averaged better than 60 miles per gallon, even though I’m really big (almost 300 pounds) and even though it could easily do 60+mph. Our scooter saved us $1200 in gas in the first 4 months– and that was last summer, when gas was less than $3 per gallon. Even motorcycles are more efficient.
As for the argument that Exxon-Mobil is “making too much in profits,” keep in mind that the tax rate on corporate profits is truly usery. What hardly anyone talks about in that 1st quarter 2008 financial report (that announced Exxon-Mobil’s $10.9B profit) is that they also paid $9.3B in worldwide income taxes– a full 49% of their worldwide profits. The U.S. government skewers businesses that make profits– which is why so many corporations pay huge bonuses and incentives to their executives, as these reduce the profits on the bottom line and save the companies money that they can re-invest in their businesses. There’s a threshhold below which, even if they make a profit, they will LOSE money for the fiscal year. So sure, they might report a profit if gas prices were cut by 50%– but they would lose all of that profit and more in taxes, and prices would continue to rise to accommodate it. This is exactly how we got to where we are (it’s not simply because oil supplies cost more).
The take-aways: drive less, use public transit, replace vehicles with fuel-efficient options, and blame taxes– at least as much as corporations– for why the gas prices are rising so much.
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We have plenty of oil within our borders. Yet we are not allowed to drill for it. Think far northern Alaska. The stupidity of being dependent on foreign oil sources when we have OUR OWN OIL is what baffles me.
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We are fairly seriously considering getting rid of our van, and going down to one car – a small hybrid. It will be a crunch getting the three car seats in the back, but we are thinking about doing it if we are able to find a home close to campus at NIU. I know this doesn’t help you in terms of a suggestion, I just mention it to let you know we are looking at options too. I don’t mind having to be creative about going places, but I DO MIND not being able to afford the non-negotiables that the gas budget is eating away.
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I’m sympathetic to all working-class Americans (and that’s most of us) about the fuel outrage.
But gretchen’s suggestion that the solution is to drill our own oil is one of those red herrings that I have never understood.
Oil is fungible. You can drill it anywhere and sell it anywhere and use it anywhere. So when we drill oil in Alaska or off our coasts, how does anyone think that it will effect the price of gasoline at the pump?
The oil companies are promoting the “drill America” approach because it’s much cheaper for them to extract oil from public lands and waters than it is to buy it or drill it from other oil producing nations.
In the United States, big oil doesn’t have to worry that its investment will be taken away, like it might in foreign countries like Venezuela.
In the United States, big oil doesn’t have to worry about the massive corruption payments that are just part of doing business in the third world, where most of the oil comes from.
In the United States, big oil doesn’t have to worry about the cost of security like it does in the rest of the world. The taxpayer provides plenty of domestic security in the form of military and law enforcement that it benefits from.
In the United States, they don’t even have to buy the land because the taxpayer will lease it to them for pennies and then only require a small royalty for what is actually drilled.
Do you see how hugely profitable the “drill America” option is?
Once it’s out of the ground, however, where will the oil go? Well, to whoever will pay the most for it, right?
Do you really imagine that the government, after it allows big oil to drill, is going to restrict where it can sell the oil? The government can’t even keep track of who belongs in the country and who doesn’t. And oil is fungible, like I said.
So, how is domestic drilling a solution to the price issue?
But even supposedly smart people are repeating this ad nauseam. I just never hear the follow up questions.
So, if oil is going to be high priced anyway, should we deplete domestic reserves?
I don’t have a silver bullet solution. The only long-term solution is to reduce demand, but that’s going to be both a painful and lengthy process. If the United States unilaterally reduces demand, other countries will still be buying oil at the artificially high market rate.
China and India will only start feeling the pinch when they can’t sell there products overseas. Right now, those economies are in such good shape that exports are offsetting the price of oil for the energy for the infrastructure to produce them.
Now that’s the kind of thing that might bring on a world-wide recession or even a depression because until everyone’s pockets are empty, the price gouging can continue.
And I have to chuckle when Congress thinks it can come up with a solution. Squandering taxpayer money to speculate on what technology might win in the alternative fuel derby is no different than gambling with someone else’s money. It seems to me like the government needs to keep out of it. Some brilliant Americans have probably already come up with some brilliant ideas. With the price of oil high and going higher, they should have no problem finding private investment.
Even big oil and OPEC realize that, at some point, economies will start collapsing. But isn’t it interesting to keep testing higher and higher prices until it reaches that point? Until the last few years, they have been, literally, giving oil away (under $15 a barrel in 1998). They could have charged a lot more for oil and the world would have paid it. That’s leaving a lot of money on the table.
Sorry, for the long post.
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We’re definitely feeling the squeeze. Just for school, Hubby drives 100 miles round trip 2x a week, and I drive 150 miles 1x a week. (The other class is online, and requires just handful of 45 mile trips.) Add in work? 30 mile round trip, 5x a week. And while we have a kinda fuel-efficient civic, it doesn’t seem to get THAT great of gas mileage–and it was $40 just to fill it up! If we go anywhere as a whole family, we take the minivan. We’re going 500 miles a week, even before doing errands, getting groceries, doctor appointments, church. . . A lot of those can be minimized, but STILL.
Even before gas prices spiked, I missed being in Ukraine without a vehicle. Being able to walk to get groceries and to church was great. Getting to other places wasn’t hard with the metro. (Though, we did take a taxi if we were bringing all four kids–but that was reasonable.)
We’re already committed to a family reunion in Colorado this summer. We’re driving. It’s going to be VERY expensive.
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As a science teacher (new to Westminster this coming fall), we usually end up talking about this topic at some point in the year. There is a lot of intelligent responses here that have been informative for me. So, thank you for that. The one idea that crossed my mind is how interesting the situation is that we are in right now. Up till this point, everything has been about expansion. Spreading out in the land, building bigger houses, buying bigger cars, and consumption rising all the time. To me, this creates a lot of laziness and lack of thought. Now, we have come to a time where we are starting to have to change our way of thinking. Our expanding civilization is now seeing that expansion was based on one thing. Fuel. Now that we are running into problems with fuel, the whole idea of getting smaller is becoming more appealing. The idea has been there all along, we just got stuck in greedy mode. Maybe now is the time, that we can start to use our God-given minds to actually be creative and resourceful again like previous generations have been.
That’s my plug right now. Just to put a vote out there….I believe hydrogen fuel is the way to go. It is much more available and renewable. Thankfully, it is being tested in automobiles currently.
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Megan! I just found your lovely blog after Jess sent me a link to hers. This is SO great. Here I am in my dusty house in the middle of the desert able to read about you clipping coupons and driving a van and living in a WHOLE other world. A great escape.
I wish I had been able to read both of your blogs all this time. Both you and Jess are such GREAT writers. I have a teensy blog – i am dipping my toe in trying to decide whether to commit to it or not (= Maybe I need some coaching…. Can you add that to the long list of things you do??
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Hey, Stephanie Choat just commented — don’t I remember her? Curly brown hair and glasses?
Anyway, we are definitely feeling the gas crunch. I calculated that I spend a dollar every 8 miles, and that was when gas was a little cheaper. So I now have this mental odometer and every time I run errands I think to myself, “There goes another dollar. There goes another dollar.” I’m so grateful to live so close to school, but Kevin’s commute is more painful even in his little efficient car. I almost want to cry when I fill up the minivan. If it ever tops $100 a tankful I think I will have a breakdown. The phrase “going postal” is going to become “going petrol.”
As for now, I’m avoiding any unnecessary errands, and I always consolidate them with carpool. Even though the grocery store is only 4 miles away, that’s a dollar in gas roundtrip. So I won’t go grocery shopping unless it’s to or from school. I guess that idea is moot once school lets out, but I’ll still map out my errands and try to get them finished in the shortest distance possible.
Oh, and I don’t mystery shop anymore unless it’s a really great shop. I can’t afford the gas.
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