Tuesday, May 09, 2006

Gas prices and perception

Just like last year about this time, stories are starting about how rising gas prices will have a big impact on the family vacation. The MSNBC story above tries to show how the price of gas has made it cheaper to fly than to drive in some cases. This is ridiculous. It's just making shit up so they can have a trendy story. Now I can see how these higher prices can have an affect on daily driving, because the added cost piles up over time, but if the increase means you can't take a vacation, then you probably couldn't really afford the vacation in the first place.

Take a scenario from the MSNBC story above. They calculate the cost of driving from Miami to Philadelphia, a round trip of 2404 miles, for a family of four in an SUV getting 17 mpg. For driving they add up, food, hotel and gas. They estimate a total of $1211. The family could fly for $138/person, according to them, for a savings of $659. They claim the biggest problem is skyrocketing gas prices. But that doesn't really hold up. They use a gas price of $2.91/gallon. On this trip they would use 141 gallons, for a gas cost of $411. But what would the price be if the cost was $2 per gallon? $282, a difference of $129. So according to the MSNBC scenario, they would still save $530 by flying. Of course they fail to mention the other considerations involved in flying like transportation in Philly, additional hotel rooms and food in Philly, since they would most likely stay longer there since they saved 3 to 4 days by flying etc... So the savings is starting to dry up. And gas isn't even the largest part of the purported savings. $129 is one night's stay in a hotel room. A family trip for four from Miami to Philly is a really big trip to begin with. I suggest that if $129 is a deal-breaker for them, they ought to just stay home and go to the beach.

But just forget about flying, just look at gas alone. A 1500 mile round-trip in a car getting 20 mpg will take about 75 gallons of gas. At $2.91/gallon, that's $218.25. At $2.00/gallon, it's $150. So a $68 difference is a make-or-break on a vacation? Maybe for a very low income family who are already planning on eating bologna in the car and staying at Motel 6 every night, but I think most people can absorb a $68 difference.

But, unfortunately, these stories will be lapped up by a lot of people who can't take the time to do a little math. Maybe that's what Richard Cohen was going for with his idiotic Algebra column.

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Storm said...

Isn't it a good thing gas prices are higher perhaps we will drive less and save the planet?

But seriously you are right in that the rising cost (faster than inflation) of a college education would have a bigger effect on the future of a family.

Or the rising cost of health care

John Howard said...

People just want to bitch about things. Sure, gas prices are high, and I would rather them not be, but they're not as high as the rest of the world. And it's hard to get your point across about high gas prices if you're driving around in a tank like SUV. Like a Navigator (or something).

And you're right, if people are taking a vacation on such a slim margin, then they need to stay home anyway.

Storm said...

And Congress caves and starts us down the road to deciding what is the appropriate amount of profit.

Here is an idea let's how much campaign fund raising (profit) politicians can do to match the amount of the lowest candidate.

I understand the concern about the Patriot Act and some other legislation but I tell you now stuff like this is greater threat to your freedom. You can not have personal freedoms without economic freedom that was why the Supreeme Court Case in Mass involving emninent domain was decided so wrong.