Are you one of those people who feel their blood pressure rising every time you drive past a gas station and see that the price of a gallon of gas is higher than the last time you filled your tank? Would you like to go tell the so-far ignored by the news media Env-Econ's Tim Haab what he can do with those prices that are compelling you to do whatever he subliminally suggests as if you have no free will?

If either of those things describe you, it's time to take a deep breath and put some things in perspective.

Let's recall, for instance, that the price of a gallon of gas has increased fairly consistently between 2002 and 2008. And as recently as a year ago, with prices about one dollar less per gallon than they are today, most people really weren't all that worked up about the price of gas. It really has only been between 2007 and 2008 that the change in the price of gas has become a truly hot topic, as the approximately $1 per gallon increase over this time has gotten consumers especially excited.

Brian Chin, for one, says that people are getting way too worked up about gas prices:

With crude oil hovering at $130 a barrel, almost every personal finance article I’ve read has been about how you can conserve gas usage or save money on gas prices. Granted, it’s fun to jump on the bandwagon with whatever todays "hot topics" are. But when you really break down your gas spending each month, it's not really as big of a deal as everyone is making it out to be.

Or is it? If you haven't yet done the math for yourself, you really have no business getting all worked up into a frothing lather now, do you?

And that's where we come in! After we're done with you, you can walk away from your Internet access point secure in the knowledge that you're either completely justified in your foaming-at-the-mouth rants against all things oil-related or that you maybe ought to put a sock in it. It really doesn't matter to us which because we'll be entertained either way.

So, let's get right to it! We'll just need to get some information about your driving habits first, then we'll work out how much of your money is really at stake for you, at least as compared to a year ago....

In the tool above, you can quickly get the price change in pennies per gallon from a year ago from the Energy Information Administration's Gasoline and Diesel Fuel Update for either your region or the U.S. as a whole. If you're not sure of your vehicle's average mileage, the government's Fuel Economy web site can provide average Miles-per-Gallon Estimates shared by those who drive the same make and model vehicle as you.

For the default numbers, we took the year-over-year change in the price of gasoline in the U.S. as of 16 June 2006 and Brian Chin's 2005 Acura RSX, for which we assume he falls into the middle of the shared average MPG estimates with 25 MPG. We'll also assume that he drives some 12,000 miles per year (or 1000 miles per month).

Using these values in our tool above, we find that today's higher gas prices divert nearly $1.41 per day, $10 a week, $43 a month, or $515 a year from where Brian might otherwise choose to spend it. Good thing he has a plan to free up the money from other places in his expenses:

Some easier ways to save $43 a month:

• Stop eating out so much. Cook at home instead (it's probably healthier too)

• Buy in bulk. There are certain items you KNOW you’re going to need in the future (toilet paper, shampoo etc). Why not save money by buying in bulk (And save an extra trip to the store while you're at it).

• Stop impulse buying. I guarantee for most of us, impulse buys amount to way more than $43 a month.

Our point, and we do have one, is that if the dollar amount change in what you pay for gas from last year to this year is what you're really upset about, you have a lot of different ways in which you can adjust other factors you can control without seriously denting your lifestyle. Like Brian, you too can get savings from other places to offset higher gas prices, so they don't have any more effect over you today than they did a year ago.

Then again, you could be like the millions of Americans who are doing exactly what Tim Haab is telling them to do without realizing it and "Drive Less!" You can just hear the evil laughter from here....

Labels: gas consumption, personal finance, tool

- posted by Ironman at 5:45 AM | Permalink | |