The True Price of Gas | Green Energy News

March 28, 2004 – Vol.9 No.1

THE TRUE PRICE OF GAS.

How costly is the seemingly high price of gas on U.S. drivers? There should be a comprehensive study.

Analysts point out that, relative to inflation on other goods and services, gasoline at the pump was higher in the early 1980’s than it is now. True enough. So consumers shouldn’t be damaged too badly, right?

But spending habits and priorities have changed since the 80’s. Consumers have more necessities draining their bank accounts now - monthly cell phone fees, cable television, Internet access for instance - all of which weren’t widely available back then. Yet it is possible that these additional monthly outlays have been absorbed by an increase in personal wealth since then. Maybe.

Further, the nation has spread out more - people live farther away from traditional employment hubs - thus commuting distances have lengthened. The greater distances mean more miles traveled, more fuel purchased than 20 years ago.

And then there’s those SUVs, light pick-up trucks and mini-vans. The popular vehicles in the 1980’s were family sedans, often fuel-efficient imports. Today the most popular vehicles are less-than-20-mile per gallon trucks. So people are driving more miles now in vehicles with lesser fuel economy. All of this adds up to even more strain on peoples’ wallets.

But will people rush out and dump the SUV for a hybrid or smaller fuel-efficient car? Some will, but unless the high gasoline prices extend for a long period, unlikely. They’ll moan and groan but continue to fill up their tanks on a charge card. They might notice the increased size of the statement each month, or not. They’ll pay what they can, often only the minimum, so will get nowhere reducing their debt.

So what may be the biggest damage of higher than expected gas prices? Increased consumer debt, already at record highs.