A reader challenges OurMontville.com ("Yippee, America is great. That's a topic? One comment so far, and it's boring") to publish his post below:
I can remember filling up a one gallon gas can for a quarter down at the old Phillips 66 in Rockaway. The year was 1969. Today, gasoline is nearly that cheap in Venezuela (38 cents per gallon), and other oil rich nations (Nigeria, Saudi Arabia, etc.) The rest of us poor saps have to pay what's starting to look like a second car payment.
At what point will the price of fuel change our habits? The average American drives 20,000 miles per year, and uses approximately 1,000 gallons of fuel @ 20 mpg. At $3 per gallon, that's $3,000 per year, or $250 per month. At $5 per gallon, the cost goes up to $417 per month. Where do those additional $167 dollars come from?
From your "disposable income", presumably. You might have preferred to go to the movies or out to dinner, but now you'll literally have to burn that money. But you won't just spend it on gasoline. The price of fuel is a significant factor in the cost of shipping, travel, food -- pretty much everything that you can buy. So when the cost of fuel goes up, it's like the rising tide, which raises all boats.
For example, FedEx just issued its second profit warning in two months on escalating fuel costs and meager demand for US freight, sending the company’s shares lower. They spend over a billion dollars each year on fuel. When the cost of overnight delivery goes up (as it has and will continue to do), watch the value equation change for catalog and Internet retailers, who must ship all of their real goods. If the current trend continues, you can expect to pay significantly more for your holiday gifts (not to mention, everything else), even if you choose to ride your bike to Wal-Mart.
Speaking of bikes, here's a quick survey question. What is the critical price per gallon that would cause you to change your behavior in any of the following ways:
Commute with a co-worker
Take the bus or train to work
Sell your SUV
Cancel a holiday road trip
Consider riding a bicycle or scooter to do your shopping
Is it:
A) $4 per gallon ($333 / month) B) $5 per gallon ($417 / month) C) $6 per gallon ($500 / month) D) $10 per gallon ($833 / month) E) Higher
What will you do differently? Perhaps we can take a lesson from the Europeans. They're already paying about $6 per gallon in the UK, and almost $7 per gallon in the Netherlands. Perhaps that's why bicycles, trains, scooters and Smart Cars are so popular over there.
One final thought: What is the true cost of oil? So far, the Iraq war has resulted in the deaths of 3,873 US soldiers, and has cost $470,376,300,000 (that's $470+ billion). It will go up $2 million while you read this article. Watch it rise at http://www.costofwar.com/.
