Demand destruction?
On Sunday I paid for my girlfriend's minivan's gas tank fillup. $2.95/gallon, 24.4 gallons equals $69. At 22mpg, that can cover 536 miles, or $0.13/mile.
A good deal or a big hit on the checkbook? Both?
Economic theory says that as prices go up, people go to alternatives, or reduce their consumption.
Since I bicycle to work, and don't even own a car myself, not much room for reducing my demand, although perhaps I'm subsidizing my girlfriend's consumption. I asked her if she was considering a smaller vehicle, and she said she needs the space for her 3 kids and day care outings, and such.
On the other hand, she said she DOES drive less when costs are higher, and hopes prices will go down before her next fill up. The scary thing for me is she ends up driving on the last quarter tank often, filling up $5 at a time, so if there's a crisis and shortages, she'll be sitting on empty without gas to buy at any price!
I can't imagine all the little decisions going on with individual and family budgets. I fear there's more than a short list of people who "charge it" for fuel, and are letting themselves fall behind month by month, delaying decisions that will only get harder.
I'd think the government itself ought to accept the costs now to high prices and encourage/reward conservation, fuel efficiency.
I'd support higher prices NOW via fuel taxes, and subsidizing programs that reduce consumption. Easy to say for me when I have enough money, but harder for people getting by now.
Higher costs will liking keep coming until we find a scalable alternative of a comparable price.
My bet is $10/gallon equivalent is probably going to be consider a good deal soon enough, certainly within 5 years.
A good deal or a big hit on the checkbook? Both?
Economic theory says that as prices go up, people go to alternatives, or reduce their consumption.
Since I bicycle to work, and don't even own a car myself, not much room for reducing my demand, although perhaps I'm subsidizing my girlfriend's consumption. I asked her if she was considering a smaller vehicle, and she said she needs the space for her 3 kids and day care outings, and such.
On the other hand, she said she DOES drive less when costs are higher, and hopes prices will go down before her next fill up. The scary thing for me is she ends up driving on the last quarter tank often, filling up $5 at a time, so if there's a crisis and shortages, she'll be sitting on empty without gas to buy at any price!
I can't imagine all the little decisions going on with individual and family budgets. I fear there's more than a short list of people who "charge it" for fuel, and are letting themselves fall behind month by month, delaying decisions that will only get harder.
I'd think the government itself ought to accept the costs now to high prices and encourage/reward conservation, fuel efficiency.
I'd support higher prices NOW via fuel taxes, and subsidizing programs that reduce consumption. Easy to say for me when I have enough money, but harder for people getting by now.
Higher costs will liking keep coming until we find a scalable alternative of a comparable price.
My bet is $10/gallon equivalent is probably going to be consider a good deal soon enough, certainly within 5 years.
posted by Ares Olympus at 7:29 PM
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