The Fora: A Higher Education Community

The salience of the gasoline price among the public, in the media, and on this board has always amazed me. We even have a fairly popular thread "What does fuel cost in your neighborhood?"

However, I wonder if we are all aware what share of our pre-tax income is spent on gasoline. That would give an objective measure of salience, at least of some kind.

Very little. We do pretty well and don't drive much. If I fill up twice a month - which is probably more often than I do - then I'm spending less than 1%.

Also very little. I spend on average $11/month. This is post-tax, of course. I only "fill up" every-other-month or so.

Other energy costs are much more significant. My house uses both gas and electricity for various heating/cooling/lights. However, even here I don't spend much. Duke Energy sends me a monthly statement reassuring me that I am one of the most energy efficient homes in my neighborhood.

Unfortunately public transit sucks where I am, so I rely on my ancient car to deposit me at work. I spend about $100/month based on where I'm teaching.

I haven't owned a car since 1984...?5...something like that.

A long time, anyway.

In fact, for a moment, I had to think, did the question mean automobile fuel, or heating oil?

(Which I don't pay for directly, either).

M.

It is hard to remember at the moment.  After COVID sent me home, I went from 2/3 fill ups a month to one every six weeks! 

Also I am still a newly wed so I have not yet quite figured out what the bride costs.

However, in normal times, I am sure that gas cost between $100 and 130 a month, but that would also change when we have breaks and take additional trips. 

Yes, I deliberately bought a house near the university, and I bike in. I get gas maybe about once every two months.

However, no question that the U.S. is not designed with any regard to reducing driving. When my mother was growing up, in the rural midwest, there were trains and inter-urbans (basically, trollies) linking all the towns. They were all killed off by the 1950s, when heavy federal subsidies of the highway system began. So it's no surprise that most people are very aware of gas prices.

Somewhere between 2-4%. We don't drive around much, but filling up is extra-expensive. Like everything here.

Just over 2%. The reason we talk about it so much is that it is a significant and volatile fraction of our variable expenses. That is, we don't notice all of the fixed expenses like mortgage/rent, insurance, etc. We may notice things like electricity and water that vary seasonally. But those are all just background with almost no decisions to make. The things we actually control are groceries, fuel, eating out, stuff like that.

Very little. Everything I need is in town. Even switched all but some specialized medical care there, so minimal trips
most of the time. But for adjuncts teaching a full load at scale via three schools across freeways, I can see how it could be thirty percent of pay or worse.

I use public transport.

I guess I must spend of the order of $1000 a year on it. Maybe more. I don't keep a record. Occasionally I use Uber these days, so probably more.

That's not including flights.

Okay, I did the actual calculations. I spend 0.141% of my income on gas for the car. That wasn't one of the options in the poll.

Quote from: Parasaurolophus on December 31, 2021, 06:12:22 PM
Somewhere between 2-4%. We don't drive around much, but filling up is extra-expensive.

Same. During the semester I will commute some 100 miles per week for teaching and another 100 for other employment. My worst expenses now are food, heating the house  and health care.

I clock in at 2%-4%, pre-tax. 2.1% to be exact. Maybe I should have rounded down.

However, I don't like using gas purchases as a measure of the cost of driving. I like to use the IRS measure of approx. 50 cents per mile as a better measure of the cost of driving my vehicle, which supposedly accounts for the total cost of car ownership spread out over time (maintenance, repairs, taxes, insurance, the purchase price of an average car spread out over the typical life span of the typical car in good condition, and of course gas). Using that, it costs me almost 9% of my pre-tax income to drive my car.

IMO, focusing on gas prices is how a teenager would think.

Between $100 and $120 a month though about a third to half is visiting family and outdoor activities. Suburban area with spotty public transport

Btw, the reason people focus on energy/fuel costs is that they affect the costs of nearly all other goods.

I average about 2 tankfulls a month at $45 each.  So about $1000 a year.  I get about 23 mpg around town and well over 30 on the highway.  The price of gas is the least of my problems.  Given Americans' propensity to drive SUVs and pickup trucks the size of aircraft carriers (and their touching belief that somehow the president sets the price of gas) no wonder this is such a topic of discussion. 

Quote from: lightning on January 01, 2022, 08:30:25 AM
However, I don't like using gas purchases as a measure of the cost of driving. I like to use the IRS measure of approx. 50 cents per mile as a better measure of the cost of driving my vehicle, which supposedly accounts for the total cost of car ownership spread out over time (maintenance, repairs, taxes, insurance, the purchase price of an average car spread out over the typical life span of the typical car in good condition, and of course gas). Using that, it costs me almost 9% of my pre-tax income to drive my car.

Yes, driving a car costs much more than just gas.  If you live in an area with poor roads/many potholes, that also adds to the average cost.  The 2022 federal rate is 58.5 cents per mile, up 2.5 cents from 2021.

Quote from: Cheerful on January 01, 2022, 11:41:28 AM

Quote from: lightning on January 01, 2022, 08:30:25 AM
However, I don't like using gas purchases as a measure of the cost of driving. I like to use the IRS measure of approx. 50 cents per mile as a better measure of the cost of driving my vehicle, which supposedly accounts for the total cost of car ownership spread out over time (maintenance, repairs, taxes, insurance, the purchase price of an average car spread out over the typical life span of the typical car in good condition, and of course gas). Using that, it costs me almost 9% of my pre-tax income to drive my car.

Yes, driving a car costs much more than just gas.  If you live in an area with poor roads/many potholes, that also adds to the average cost.  The 2022 federal rate is 58.5 cents per mile, up 2.5 cents from 2021.

Yes, 58.5 cents per mile, but I can't calculate driving costs in my head without rounding it down to 50 cents a mile. It's all very approximate, in either case. It's really easy to calculate the cost of a round-trip road trip when I use the rate of 50 cents to a mile.

I was driving [sorry :-)] at the effect of the gasoline price on the cost of living, not the cost of driving.

Most posters are at or under the national average of 2.5% [2019] of income spent on gas. Two per cent looks like a common number among posters. Thus, if the price of gasoline goes up by 100%, i.e. it doubles, their cost of living goes up by at most 2.5% cent. [Less because we drive less.]

I suppose that's big enough to be noticeable, and as the price fluctuates, to be newsworthy.

Quote from: dismalist on January 02, 2022, 11:32:55 AM
I was driving [sorry :-)] at the effect of the gasoline price on the cost of living, not the cost of driving.

Most posters are at or under the national average of 2.5% [2019] of income spent on gas. Two per cent looks like a common number among posters. Thus, if the price of gasoline goes up by 100%, i.e. it doubles, their cost of living goes up by at most 2.5% cent. [Less because we drive less.]

I suppose that's big enough to be noticeable, and as the price fluctuates, to be newsworthy.

Not really, since the cost of fuel affects the costs of lots of other goods.

Quote from: Sun_Worshiper on January 02, 2022, 11:44:17 AM

Quote from: dismalist on January 02, 2022, 11:32:55 AM
I was driving [sorry :-)] at the effect of the gasoline price on the cost of living, not the cost of driving.

Most posters are at or under the national average of 2.5% [2019] of income spent on gas. Two per cent looks like a common number among posters. Thus, if the price of gasoline goes up by 100%, i.e. it doubles, their cost of living goes up by at most 2.5% cent. [Less because we drive less.]

I suppose that's big enough to be noticeable, and as the price fluctuates, to be newsworthy.

Not really, since the cost of fuel affects the costs of lots of other goods.

Yes, and to different degrees, no less. But depending on macro conditions, many prices could even fall while the gasoline price and other prices rise.  So, one price at a time, or ceteris paribus, to cut through the complications. 

Quote from: dismalist on January 02, 2022, 11:59:00 AM

Quote from: Sun_Worshiper on January 02, 2022, 11:44:17 AM

Quote from: dismalist on January 02, 2022, 11:32:55 AM
I was driving [sorry :-)] at the effect of the gasoline price on the cost of living, not the cost of driving.

Most posters are at or under the national average of 2.5% [2019] of income spent on gas. Two per cent looks like a common number among posters. Thus, if the price of gasoline goes up by 100%, i.e. it doubles, their cost of living goes up by at most 2.5% cent. [Less because we drive less.]

I suppose that's big enough to be noticeable, and as the price fluctuates, to be newsworthy.

Not really, since the cost of fuel affects the costs of lots of other goods.

Yes, and to different degrees, no less. But depending on macro conditions, many prices could even fall while the gasoline price and other prices rise.  So, one price at a time, or ceteris paribus, to cut through the complications.

Agriculture is one of those fields, yes? So higher fuel rates really put a hurt on lower income workers who drive. I'm assuming diesel and fuel oil prices are highly correlated to gasoline prices most of the time.

Is that incorrect?

Quote from: dismalist on January 02, 2022, 11:59:00 AM

Quote from: Sun_Worshiper on January 02, 2022, 11:44:17 AM

Quote from: dismalist on January 02, 2022, 11:32:55 AM
I was driving [sorry :-)] at the effect of the gasoline price on the cost of living, not the cost of driving.

Most posters are at or under the national average of 2.5% [2019] of income spent on gas. Two per cent looks like a common number among posters. Thus, if the price of gasoline goes up by 100%, i.e. it doubles, their cost of living goes up by at most 2.5% cent. [Less because we drive less.]

I suppose that's big enough to be noticeable, and as the price fluctuates, to be newsworthy.

Not really, since the cost of fuel affects the costs of lots of other goods.

Yes, and to different degrees, no less. But depending on macro conditions, many prices could even fall while the gasoline price and other prices rise.  So, one price at a time, or ceteris paribus, to cut through the complications.

The point is that you can't disentangle fuel from the price of goods, which appears to be the point of this thread.

Quote from: Sun_Worshiper on January 02, 2022, 03:24:42 PM

Quote from: dismalist on January 02, 2022, 11:59:00 AM

Quote from: Sun_Worshiper on January 02, 2022, 11:44:17 AM

Quote from: dismalist on January 02, 2022, 11:32:55 AM
I was driving [sorry :-)] at the effect of the gasoline price on the cost of living, not the cost of driving.

Most posters are at or under the national average of 2.5% [2019] of income spent on gas. Two per cent looks like a common number among posters. Thus, if the price of gasoline goes up by 100%, i.e. it doubles, their cost of living goes up by at most 2.5% cent. [Less because we drive less.]

I suppose that's big enough to be noticeable, and as the price fluctuates, to be newsworthy.

Not really, since the cost of fuel affects the costs of lots of other goods.

Yes, and to different degrees, no less. But depending on macro conditions, many prices could even fall while the gasoline price and other prices rise.  So, one price at a time, or ceteris paribus, to cut through the complications.

The point is that you can't disentangle fuel from the price of goods, which appears to be the point of this thread.

But I just did! :-)

Quote from: dismalist on January 02, 2022, 04:02:26 PM

Quote from: Sun_Worshiper on January 02, 2022, 03:24:42 PM

Quote from: dismalist on January 02, 2022, 11:59:00 AM

Quote from: Sun_Worshiper on January 02, 2022, 11:44:17 AM

Quote from: dismalist on January 02, 2022, 11:32:55 AM
I was driving [sorry :-)] at the effect of the gasoline price on the cost of living, not the cost of driving.

Most posters are at or under the national average of 2.5% [2019] of income spent on gas. Two per cent looks like a common number among posters. Thus, if the price of gasoline goes up by 100%, i.e. it doubles, their cost of living goes up by at most 2.5% cent. [Less because we drive less.]

I suppose that's big enough to be noticeable, and as the price fluctuates, to be newsworthy.

Not really, since the cost of fuel affects the costs of lots of other goods.

Yes, and to different degrees, no less. But depending on macro conditions, many prices could even fall while the gasoline price and other prices rise.  So, one price at a time, or ceteris paribus, to cut through the complications.

The point is that you can't disentangle fuel from the price of goods, which appears to be the point of this thread.

But I just did! :-)

You did, but your point is meaningless since fuel prices don't exist in a silo.

1.34% of my take-home income (after tax).

Quote from: Sun_Worshiper on January 02, 2022, 04:10:15 PM

Quote from: dismalist on January 02, 2022, 04:02:26 PM

Quote from: Sun_Worshiper on January 02, 2022, 03:24:42 PM

Quote from: dismalist on January 02, 2022, 11:59:00 AM

Quote from: Sun_Worshiper on January 02, 2022, 11:44:17 AM

Quote from: dismalist on January 02, 2022, 11:32:55 AM
I was driving [sorry :-)] at the effect of the gasoline price on the cost of living, not the cost of driving.

Most posters are at or under the national average of 2.5% [2019] of income spent on gas. Two per cent looks like a common number among posters. Thus, if the price of gasoline goes up by 100%, i.e. it doubles, their cost of living goes up by at most 2.5% cent. [Less because we drive less.]

I suppose that's big enough to be noticeable, and as the price fluctuates, to be newsworthy.

Not really, since the cost of fuel affects the costs of lots of other goods.

Yes, and to different degrees, no less. But depending on macro conditions, many prices could even fall while the gasoline price and other prices rise.  So, one price at a time, or ceteris paribus, to cut through the complications.

The point is that you can't disentangle fuel from the price of goods, which appears to be the point of this thread.

But I just did! :-)

You did, but your point is meaningless since fuel prices don't exist in a silo.

All prices hang together.

From the point of view of an individual consumer, who faces given prices, I just showed how a single price change affects welfare. It's nothing more than the arithmetic of budgets, with an afterthought of substitution thrown in.

If one knew how all relative prices change together, one would be welcome to use this information to calculate a new budget. Suppose the gas price rises 100%. Gimme some numbers! :-)

There are not a lot of good substitutes for gas (ie demand is inelastic to a good degree).  So when prices go up, it is felt more.  Also, 2% of the budget is not exactly insignificant!  After all, at the limit, there are only 50 items that even COULD be 2% of your budget! 

When other prices increase we can at least TRY to find a substitute, but there is no substitution for gas.  Public transportation is not available in a lot of places!  Also, if you are in an area with no public transportation, then you are probably too far from basic needs to walk or bike reasonably either. 

Quote from: clean on January 02, 2022, 04:51:31 PM
There are not a lot of good substitutes for gas (ie demand is inelastic to a good degree).  So when prices go up, it is felt more.  Also, 2% of the budget is not exactly insignificant!  After all, at the limit, there are only 50 items that even COULD be 2% of your budget! 

When other prices increase we can at least TRY to find a substitute, but there is no substitution for gas.  Public transportation is not available in a lot of places!  Also, if you are in an area with no public transportation, then you are probably too far from basic needs to walk or bike reasonably either.

And since most of the average person's 100% is already committed at any given time, another 2% is a disproportionately large chunk out of whatever discretionary money they may have.  No question about it--for many people a sudden spike in gas prices would be a serious hit.

I'm another one-percenter, or just slightly over, anyway.  That's an actual figure.  Only a few days ago I did my annual analysis of my spending for the past year.  My gasoline expenses have been running in the one percent or so range for the several years that I've been doing this.  I drive a small car and commute to work on foot or by bicycle.  Natural gas and electricity for my house ran about another four percent or so of income for the year.

I notice gas prices when they're in the news and when I take multi-state road trips. Driving from TX to SC and back over the holidays, I watched gas prices increase by almost 50 cents a gallon going east, then decline going west. I drive a sedan and live within five miles of work, so I typically spend $20 - $30 for a tank of gas a couple of times a month.