Thursday, September 01, 2005

Gasoline Budgets

I was overhearing conversation about how people are reworking their finances as gas prices have increased. Now I've made the point that prices aren't too bad. In historical terms, gas prices are about normal compared to how depressed they were in the 1990s.

Still, prices have gone up sharply as a result of Katrina and will keep going up until the refineries and oil platforms along the gulf coast are brought back online. So we aren't talking about normal oil prices in the short run, we are dealing with an artificial scarcity.

Since I work with a bunch of analysts this got us talking over lunch. At what point does the increase in gas prices really hit home for us? Well this is my story.

My regular commute to work, including driving to lunch, costs me about 3 gallons of gas. Probably less, but lets be worst case. I work a compressed schedule so I work approximately 19.5 days in an average month. This means I burn 58.5 gallons of gas a month just getting to work. In all my driving it's around 75 gallons/month. At $2.50/gallon, this means I'm spending $187.50/month on gas. I am fine with that. That is $40 more than my monthly car insurance bill (as a single white male who pays the Fast and Furious tax). It is significantly less than my monthly car payment was (which I had accelerated to the tune of $400/month). I fortuitously paid my car off last month.

Thank you Lord for leading me towards wise fiscal planning.

Now gas prices are going up. I'm now paying $9/day for my commuter gas instead of $7.50/day. That's $225/month or ~$37.50 more. I can still live with it, especially now that I don't have a car payment. I wouldn't be at all surprised if gas topped $4/gallon before the gulf coast gets back on track, then we're looking at $300/month.

The problem is that while these prices are high, they aren't killing me. They aren't even costing me enough money to open up new modes of transportation yet. $9/day or $12/day isn't enough make a commuter train ticket the low cost option. Not where I am. Every 10 cent increase in gas prices costs me $7.50/month and $90/year. That is a goodly chunk of change, but it isn't enough to insure an additional lower cost vehicle (like a motorcycle). Even if we hit $4 gas, $900/year isn't enough to force me to buy a new car.

What I may do is start a carpool with coworkers from Newark. That will drop my gas usage to work which is my major cause of gas consumption. When I buy my next car, I'll look for even more fuel efficiency than I already get. Other than that, I'm sticking with what I'm already doing. I can afford it.

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