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Gas prices hit home

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Illinois

The Tribune story on record high gas prices contains the usual estimate that driving will increase anyway…

Despite high prices, observers say Americans will drive more on vacation this year than last, meaning demand for gasoline will stay strong. According to estimates by the AAA, 38 million people will hit the road this weekend, up about 1.7 percent from last year.

But this part is just as important…

The auto club said people on vacation typically compensate for higher gas prices by eating out less often and practicing other economies. They don’t stop traveling.

And this is somewhat misleading because it ignores a critical sector of the populace…

Lynne Kiesling, a senior lecturer at Northwestern University’s department of economics, said that although gasoline is as expensive as any time in history, the burden for many families is less.

“Household incomes are higher” than in the past, Kiesling said. She said the share of income spent on gasoline is lower now than a generation ago.

And while quite comprehensive, the article somehow misses this tidbit…

…the U.S. Department of Transportation says drivers actually logged fewer miles than usual over the last three months.

* The Glengariff Group just finished a statewide poll on gasoline prices…

52% of Illinois resident said they had to postpone spending on other purchases they wanted to make, while 46% said they did not. More than half of Illinois residents have changed their spending patterns based on this latest surge in gas prices.

But most importantly, take a look at this…

Hardest hit appear to be minority communities with 76% of Hispanic residents altering their spending habits and 61% of African American resident altering their spending habits.

Has the price at the pump impacted your wallet yet?

posted by Rich Miller
Tuesday, May 22, 07 @ 9:22 am

Comments

No, but the proposed GRT has!

Comment by nomoretax Tuesday, May 22, 07 @ 9:31 am
“Household incomes are higher” than in the past, Kiesling said. She said the share of income spent on gasoline is lower now than a generation ago.

I only went to ISU, but that statement can’t be correct.

Comment by Shelbyville Tuesday, May 22, 07 @ 9:52 am
Household income includes anyone living in a house/home over the age of 15. It’s an aggregate. I guess the only people that it leaves out are people w/out homes and wage earners under the age 15. I know kids have more buying power than they did when we were kids, but jeezzz…

If you talking about the minority households…they are included in household income. So nothing is misleading.

In real terms prices are a little higher than in 2005 and 2006, but still below their peak in 1981.

This post reminds of me of the old joke about the Washington Post as the end of the world approaches, the headline reads: “World Ending Tomorrow; Minorities, Women Hardest Hit.”

Comment by Greg Tuesday, May 22, 07 @ 10:00 am
Shelbyville,

is a chart that illustrates the relationship between household income and gas prices.

(hopefully my html works, sorry if it didn’t).

Comment by Greg Tuesday, May 22, 07 @ 10:04 am
The price of gas in Chicago is perilously close to $4/gallon, and some stations are already selling premium at that price. So, yes, the price of gas is hitting my wallet.

The more important question is whether it’s changing my gas habits. The answer is, no — not in the short term.

And that’s where I’d like to see policy makers focus their efforts. Gas prices in the last couple of years have been extremely volatile. Yet my choices as a consumer of gas don’t match the short term volatility. For example, I can’t simply go out and buy a more fuel efficient car in response to short-term price changes; I can’t move closer to work without making a multi-year commitment; and the public transportation options are much slower to be built and available.

This is an example where the free market does not work to the benefit of middle class families and individuals. Demand for gas in an automobile, suburban cultural is far less elastic than supply. In fact, it’s pretty fixed in the short term, especially if you live from paycheck to paycheck. (This may explain the discrepancy with minority populations; it may be income rather than race that’s preventing altering spending habits.)

Consumers (in this case ordinary people) should be given more options, and policy makers should work toward gas price stability. Lowering the gas prices should not be the goal in itself, because too many global economic forces are in play that lead to higher prices. Tinkering with the price without helping ordinary consumers respond to the higher price will simply defer an even greater crisis.

And for those who think this conclusion is anti-business, I’d simply point out that businesses incur even higher costs when they try to switch energy sources. They are hit hard by price instability as well. The only winners here are the suppliers of petroleum and gasoline.

Comment by the Other Anonymous Tuesday, May 22, 07 @ 10:04 am
Well, that worked well. Let’s try this:

http://agoraphilia.blogspot.com/2007/05/affordability-of-gasoline-2-combustion.html

Comment by Greg Tuesday, May 22, 07 @ 10:05 am
Prices at the pump have impacted my wallet for years.

Comment by Patriot Tuesday, May 22, 07 @ 10:09 am
And can you believe that chief DuPage Dope Dillard wants to give more to refiners/retailers with a suspension of the gas tax…. they don’t cuts prices Kurtie.

Comment by Reddbyrd Tuesday, May 22, 07 @ 10:43 am
Redbyrd said, “And can you believe that chief DuPage Dope Dillard wants to give more to refiners/retailers with a suspension of the gas tax…. they don’t cuts prices Kurtie.”

Yet, prices for gasoline at the retail level rise and fall all the time. In 2006 gas prices were $3.00 but just a few months ago, prices were $2.39 per gallon. In real terms gas prices were a little higher than they are today, yet in the mid-90’s they fell in real terms to almost record lows as the price per barrel of oil fell to $10.

Comment by Greg Tuesday, May 22, 07 @ 10:51 am
Free gas cards for illegal aliens?

Comment by Milo Minions Tuesday, May 22, 07 @ 11:10 am
My cost of gasoline has been halved. I traded in my vanilla pick up for a vanilla Saturn. So, I spend less on gasoline that I used to. I went from 15 miles per gallon to 32. A vehicle that seats three to one that seats five.

If you want to believe we are all victims of something or other, I have a better idea. Try being an adult and taking responsibilty of your own money and actions.

Sometimes I see reporters wanting to paint us all as fat people in a sinking rowboat, fighting over the last piece of fried chicken.

Go ahead and be pathetic. I rather not.

Comment by VanillaMan Tuesday, May 22, 07 @ 11:35 am
In our household, we went from 2 drivers to 4 in the last 4 years. How many HS or junior college students walk or take the bus anymore? Young students or stay-at-home working adults can absorb the $1 a gallon price jump from last year. It’s just one less CD or piece of clothing each week out of their disposable income.

Comment by Six Degrees of Separation Tuesday, May 22, 07 @ 11:43 am
Gregg:
Sadly Illinois proved a few years ago that when states cut taxes prices do not decrease. It was called the Ryan Folly a few years ago.
Why give the industry even more? The Wall Street Journal reported last week that refiners profits were over $30 a barrel in the 1stQ of 07.

Comment by Reddbyrd Tuesday, May 22, 07 @ 11:44 am
Redbyrd,

George Ryan put a six month moritorium on the gas tax and the price of gas in Illinois went from over $2 per gallon to around a $1.35 per gallon. So, I don’t know how you can claim prices didn’t decrease.

He told a House Cmte at the time that the reason for doing so was because Illinois residents were crosssing the state border to buy cheaper gasoline in places like Indiana. His justification was to protect Illinois businesses.

As far as people earning more money as a result of market conditions — higher demand — that’s a good thing. It creates incentives to make more. Of course in our country the government has gotten in the way to prevent the building of new refineries and new sources of domestic production because of environmental concerns.

I would note that when price of fuel drops, we hear our politicians argue that we don’t pay enough for gasoline and that if we paid more we would have cleaner air. But when the prices rise, it’s bad because someone is making a buck. Which is it?

Comment by Greg Tuesday, May 22, 07 @ 12:16 pm
Of course, and the only people that have not been affected have more disposable income. I would say that the people that are not affected also, in many cases, have direct or indirect income from the fuel sources. The rich get richer and the poor get poorer.

Comment by i d Tuesday, May 22, 07 @ 12:21 pm
The increase in prices hasn’t affected me much. I rarely drive, and when I do its for groceries or work (work being reimbursed fully to me). I haven’t bought gas yet this month. I drive a Ford Focus now, which gets 10 more mpg than my old car got.

The CTA may be collapsing, but I still praise its existence. The biggest way the price increases will affect me are when I drive to see family in Wisconsin and Downstate. Should the cabdrivers get their fare hike, I’ll undoubtedly become more patient about waiting for the bus.

Comment by Jerry Tuesday, May 22, 07 @ 12:25 pm
just bought a used VW jetta diesel. 49 mpg. i drive about 30000 miles a year.
My former car only got 22 and was gas operated.
30000/22=1363 gallons of gas per year
1363*3.20=$4361 annual fuel cost in past
30000/49=612 gallons of diesel per year
612*2.90=$1774 annual diesel cost
4361-1774=$2587 annual fuel savings
$2587/12=$215 per month savings
If you drive alot like I do then get a diesel. They last longer and are cheaper to drive.
Even Nino Brown enjoys low overhead.

Comment by nino brown Tuesday, May 22, 07 @ 1:23 pm
Got a beater truck, a van for work, and a nicer car my wife drives. All paid for years a ago and all in good shape. Yeah, the cost of gas is a pain. Each get $60-$70 a fill up that lasts almost 2-4 weeks. The combined price increase cost of about $60 a month does not match the $175 month jump in electricity or the 15% health insurance increase. When the gas price goes higher - the bike comes out and I walk more often. Luckily work is 3 miles away. No mass trans in our area. What kind of raises does Lynne Kiesling get when gas is a smaller portion of income. I just cut other costs or make stuff last longer.

Comment by zatoichi Tuesday, May 22, 07 @ 1:43 pm
Zero! Priceless!

Comment by What's the Blago done? Tuesday, May 22, 07 @ 2:02 pm
Discretionary income goes from fun stuff to gas. I can’t control the price of gas and I can barely control the amount I need to use. I don’t do much ‘cruising’ just required driving.

Comment by Jechislo Tuesday, May 22, 07 @ 2:27 pm
Not in the current time frame has the price affected me…but, in planning to retire in the near furture, some REAL changes to activities during my retirement are being looked at. For those who once considered…Hey! let’s retire and travel…Yea…right. Only if you have one of those 6 digit figures from the other blog question. And yes, I will be a State retiree…sorry only 5 small digits…so the looking at different activities..are REALLY becoming a necessity…

Comment by Siyotanka Tuesday, May 22, 07 @ 3:01 pm
IT’s pinching me like an annoying aunt at a family reunion. If you have to travel, it’s not fun and it’s downright aggravating. ARGH! Is that oversimplifying?

Comment by Team Sleep Tuesday, May 22, 07 @ 4:23 pm
Yes. I have definitely tried to reduce how much I drive by grouping things and walking between places after parking in one place. Of course this is good for the environment and something we should all be doing anyway.

Comment by way northsider Tuesday, May 22, 07 @ 4:55 pm
Yes. I have noticed the increase even though I only commute 15 miles back and forth to work. The bigger picture is the increased cost of everything that is transported. I’m getting nickel and dimed to death - just trying to hold on to my wallet.

Comment by Holdingontomywallet Tuesday, May 22, 07 @ 5:00 pm
VM,
Does your gun rack and the rifles fit in the Saturn?

Comment by Bill Tuesday, May 22, 07 @ 5:44 pm
Greg:
Sorry to comment so late in the day, but prices did not move a drip, drop, dime with the Ryan Folly. Fortunately no one is silly enough to fall for the Dillard scam.
Next think you will be telling me the retailers are not making more with the big run-up

Comment by Reddbyrd Tuesday, May 22, 07 @ 6:29 pm
From a May 17, 2007 Chicago Sun-Times story:

“Illinois repealed its sales tax on gas from July 2000 to January 2001 under Gov. George Ryan. Ryan credited the repeal with helping to lower gas prices around the state.”

Here’s a longer version of the same story:

“Illinois repealed its sales tax on gas from July 2000 to January 2001 under Gov. George Ryan. At the time, gas prices were topping $2 a gallon in some areas, and the sales tax was bringing in roughly $360 million per year. Ryan credited the repeal with helping to lower gas prices around the state; following the move, prices dropped to as low as $1.34 in Springfield.”

You can argue the factors that went into the price decrease — probably the end of summer driving season, lessening demand and other market forces — but nonetheless prices decreased. It’s a fact, they went down. If you don’t believe me, write the Sun-Times and demand a correction. I don’t think you’ll get very far.

I would hope the retailers would see increased profits with the price spikes otherwise they will be unable to purchase more gasoline because the price you pay today is based on their bet on the replacement costs of that fuel.

Quite frankly, I have yet to see a viable alternative to the profit motive in an economy. Unless you think Cuba is a success.

Comment by Greg Tuesday, May 22, 07 @ 8:05 pm
I found it interesting that Blago commented on the high costs of gas and electricity in his pathetic letter to the editor in Sunday’s Chicago Tribune as a reason to pass his GRT. Was gas at almost $4.00 a gallon when he started promoting his GRT? No.

Has he addressed the high cost of electricity? No. He can’t even come up with a rational reason to support his stupid tax increase. Maybe Bill can help him make up some other pathetic excuses considering his smart a$$ed comment to VanillaMan. Especially since VM has the right idea about using less gas by getting a more fuel efficient vehicle.

Read the paper. There are reasons for these prices. Face it. Oil is controlled by forces we cannot affect, other than to conserve.

Comment by Papa Legba Tuesday, May 22, 07 @ 9:04 pm
as a homeowner in an inner-ring burb with good access to metra and cta, i figure the value of my house can only go up as gas prices do…given that, and a desire to see car emissions lowered, i say tax it up to $5 a gallon

Comment by corvax Wednesday, May 23, 07 @ 8:12 am