In which I am annoyed at the radio

xrayspx's picture

"(Consumers are) getting their raise through the gas tank rather than their employers" - Sudeep Reddy, Marketplace

Sorry Kai, but yeah, that is a really weak statement. Between that quote last week, and all the stories about consumers already buying bigger more gas-guzzlin'er trucks and SUVs because pump prices have gone down, I just got annoyed enough to write this.

People don't really look at what's their ultimate best interest, they don't make math-based decisions. They think "Wow, gas just went down by 20%, so I can buy a car which uses 60% more fuel". Here is math:

At 90 miles/day, I drive somewhat more than the average person (78% of people have a less than 20 mile commute? DAMMIT). My 2005 Toyota gets a consistent 34MPG. Gas has gone down by 60 cents around these parts.

So what does that mean?

270mi per week (I work from home two days a week)
8 gallons of gas

$28.40 - 8 gallons of gas at $3.55

$23.60 - 8 gallons of gas at $2.95

$39.85 - What I'd pay at $2.95/gal for the 13.5 gallons of gas I'd use if I bought an SUV making 20mpg

(So all this means that I pay $7.80 every day to sit in traffic for > 3 hours, before factoring in maintenance / wear & tear)

That means that the difference caused by this precipitous drop in prices is $5 per week, for me. That's not even enough for a pack of smokes. So much for people "getting their raise through the gas tank". $260 per year, thanks a bunch guys, but I'm better off with even a 1% pay increase. Even with the 20MPG Jeep that I had prior to the Toyota, it would still only be a $9/week difference. Not exactly enough to finance payments on a new SUV, let alone the fact that you now burn much more gas than is offset by the price decrease.

Being able to do arithmetic also accounts for why I don't drive a Prius or whatever. There's no way the increased milage would pay off over the facts that a Prius costs $10000 more (base) than I paid for the Corolla which is fully paid for. Even if I were to get a new car, it's unlikely the Prius speicfically would be worth the extra cost for the extra 14MPG, that's not even factoring in battery changes, which aren't cheap, and which I'm sure I'd have needed a couple of to match the 220,000 miles on my Corolla.

I don't pretend to know or care why people make the choices they do, but it's almost certainly more that they "feel" things are "good", and so decide to splurge on some new car, telling themselves that gas is cheap, so it doesn't matter.

People probably feel this way because of glib statements by people they perceive as being subject matter experts.

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