$7 gas - what would you do?

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities

How would you handle $7 gas?

Drive less
88
58%
Use more public transport
11
7%
Sell my/our car
2
1%
Carpool
8
5%
Carpool
8
5%
Other
36
24%
 
Total votes: 153

AJ
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$7 gas - what would you do?

Post by AJ » Sun Jun 29, 2008 8:47 am

There is a new CIBC report that predicts $7 gas by 2010. What changes would you make to your lifestyle to handle $7 gas?

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canucknyc
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Post by canucknyc » Sun Jun 29, 2008 8:58 am

keep riding the NYC transit as much as i do today :)

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White Coat Investor
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Post by White Coat Investor » Sun Jun 29, 2008 9:07 am

It's funny you mention this. Here in Britain diesel fuel is ~ 1.35 pounds sterling/liter. That works out to $10.22/gallon. As near as I can tell, people just keep driving, maybe cutting back a bit, combining trips etc, but the freeways are still full and there's plenty of traffic. And their alternative public transportation system is light years ahead of the US. But it isn't all that cheap either. A day pass on the London Tube is $14.

So...$7...I marked no change at all. Maybe at $15.
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AJ
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Post by AJ » Sun Jun 29, 2008 9:17 am

EmergDoc wrote:It's funny you mention this. Here in Britain diesel fuel is ~ 1.35 pounds sterling/liter. That works out to $10.22/gallon. As near as I can tell, people just keep driving, maybe cutting back a bit, combining trips etc, but the freeways are still full and there's plenty of traffic. And their alternative public transportation system is light years ahead of the US. But it isn't all that cheap either. A day pass on the London Tube is $14.

So...$7...I marked no change at all. Maybe at $15.
I couldn't post the article earlier. Here is the report for those that are interested:
http://research.cibcwm.com/economic_pub ... sjun08.pdf

They predict that there will be 10 million less vehicles in the US by 2012. From the poll so far looks like it won't be boggleheads :)...

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Post by Alex Frakt » Sun Jun 29, 2008 9:21 am

They predict that there will be 10 million less vehicles in the US by 2012. From the poll so far looks like it won't be boggleheads
Maybe the Bogleheads are better positioned than others. I bet in general Bogleheads have shorter commutes and drive more fuel-efficient cars than other Americans with similar demographics.

My wife and I already got rid of one of our cars when we moved within walking distance of work 5 years ago. We made the move because we felt the mental and physical health benefits of avoiding a Chicago commute were worth paying a higher rent (and now mortgage). Higher gas prices end up reducing the cost differential. In addition to having to buy much less gas, the value of our condo has been positively affected as city-center living becomes more popular.

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DA
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Re: $7 gas - what would you do?

Post by DA » Sun Jun 29, 2008 9:35 am

AJ wrote:There is a new CIBC report that predicts $7 gas by 2010.
2010?

If a major hurricane or two blows through the Gulf of Mexico this season we may see it a lot sooner than that.

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rob
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Post by rob » Sun Jun 29, 2008 10:09 am

It' not the direct fuel prices that bother me (apart from winter heating :shock: )... It's the increase in prices of everything. More concerning - what about all the products made with oil (that have no viable alternatives) - it's more common then you would first think once you look?
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien

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canucknyc
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Post by canucknyc » Sun Jun 29, 2008 10:31 am

rob wrote:It' not the direct fuel prices that bother me (apart from winter heating :shock: )... It's the increase in prices of everything. More concerning - what about all the products made with oil (that have no viable alternatives) - it's more common then you would first think once you look?
a very good point - i think the potential reactions listed in the poll are far from exhaustive: maybe i'll buy fewer organic foods if the increased transportation costs make the price prohibitive... maybe i'll get delivery for dinner less often to avoid paying delivery charges (but not likely 8) )

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Post by chaz » Sun Jun 29, 2008 11:12 am

Keep on driving.
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avalpert
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Post by avalpert » Sun Jun 29, 2008 11:42 am

Gas makes up less than 2% of my expenses today, why would I care if that rose to 3%?

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Walden
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Post by Walden » Sun Jun 29, 2008 11:47 am

Where is the bike option? :)

I would just keep doing what I'm currently doing: riding my bicycle almost everywhere.

jysharma
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Post by jysharma » Sun Jun 29, 2008 11:52 am

I just feel that the world will once gain become smaller.
Globalization has been the buzz word for the last 60 years!
Globalization of manufacturing works only with the inherant assumption of negligible transportation costs. Local buisnesses were wiped out by more efficient operations thousands of miles apart.
But now, with increased transportation costs, manufacturing locally will make a recovery.
Interestingly, the services industry will continue to be globalized. You will receive more of your cusomer support from the other side of the world.
Interesting changes at the macro level.

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nick22
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Do nothing different

Post by nick22 » Sun Jun 29, 2008 1:06 pm

I marked do nothing. I would likely drink less Starbucks, but my commute is 6 miles at a reasonable 20-24 mpg. The public transportation options in Cincinnati are rather thin. Easier to drink homemade generic coffee!
Nick22

plex
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Post by plex » Sun Jun 29, 2008 1:57 pm

I would drive the same whether gas was $1 or it was $10. My philosophy is to always keep on top of my costs.

That way, I don't have to worry about if I am spending too much doing something, because I have already done everything reasonably possible.

While gas is only a small part of my budget, it does concern me what sort of inflationary effects the huge increases in price will have on all other goods and services. Gas is a form of "variable inflation" that is not really well tracked.

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Post by SoonerSunDevil » Sun Jun 29, 2008 2:08 pm

rob wrote:It' not the direct fuel prices that bother me (apart from winter heating :shock: )... It's the increase in prices of everything. More concerning - what about all the products made with oil (that have no viable alternatives) - it's more common then you would first think once you look?
This is often the most forgotten fact regarding high oil prices. I was purchasing shoe polish the other day and noticed that the exact same brand and size that I purchased a year ago has gone from $2 to $4. While this is a very small increase in dollar terms, and an even smaller portion of my disposable income, it does show just how many consumer items are related to crude oil.

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Post by jh » Sun Jun 29, 2008 2:12 pm

...
Last edited by jh on Thu Jul 17, 2008 2:20 pm, edited 1 time in total.

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Cosmo
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Post by Cosmo » Sun Jun 29, 2008 3:15 pm

rob wrote:It' not the direct fuel prices that bother me (apart from winter heating :shock: )... It's the increase in prices of everything. More concerning - what about all the products made with oil (that have no viable alternatives) - it's more common then you would first think once you look?
The price of disposable diapers have gone up and continue to do so. For some families, this will likely make a tremendous impact on their budget over time.

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Rob5TCP
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Post by Rob5TCP » Sun Jun 29, 2008 3:21 pm

Driving only 3k miles a year and getting 30 mpg (mostly of my traveling is by NYC subway) the effect would be minimal. My driving habits would not change.

But, as pointed out the repercussions could be great. Two contracts, from clients, over the past six months, have been canceled, primarily because their business can not absorb the fuel increase. So, indirectly, the effects might be great. That remains to be seen.

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tokyoleone
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Post by tokyoleone » Sun Jun 29, 2008 3:33 pm

In Japan gas costs about ¥170 a liter which works out to roughly about $7 a gallon.

Almost nobody drives to work in Tokyo and I don't have or need a car. The trains and subways are frequent, efficient, almost always get you anywhere in the city faster than a car, and cheap. But they are (unbelievably) crowded during rush hour! Still, after living for years without a car I have gotten used to it and wouldn't want to own one now

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Post by Valuethinker » Sun Jun 29, 2008 4:09 pm

tokyoleone wrote:In Japan gas costs about ¥170 a liter which works out to roughly about $7 a gallon.

Almost nobody drives to work in Tokyo and I don't have or need a car. The trains and subways are frequent, efficient, almost always get you anywhere in the city faster than a car, and cheap. But they are (unbelievably) crowded during rush hour! Still, after living for years without a car I have gotten used to it and wouldn't want to own one now
Another feature of Japan, I believe, shared with Netherlands and Denmark (but most definitely not UK), is the extent to which they try to make bicycling convenient: eg bicycle racks at every train station (in a country where petty crime is so low, this works better than in the UK, say, where if it is not bolted to the ground, it will be stolen or at least vandalised).

Studies have shown that the vast majority of trips in the UK are less than 5km (something like 90% of all trips). ie perfectly suitable for cycling, with limited/ no time penalty over driving.

However we have deliberately made our roads dangerous and uncomfortable for cyclists, and our drivers are famous for their harassment of cyclists. Our cyclists return the favour by riding on the sidewalks, ignoring traffic lights and otherwise threatening pedestrians.

By this long and deeply held government policy, we have made the UK more dependent on foreign energy sources, and reduced the health and fitness of the UK population.

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celia
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Post by celia » Sun Jun 29, 2008 4:15 pm

Alex Frakt wrote: Maybe the Bogleheads are better positioned than others. I bet in general Bogleheads have shorter commutes and drive more fuel-efficient cars than other Americans with similar demographics.
I think a lot of Bogleheads are retired or soon to be.

I look at it as a very small part of my expenses, less than 1% is for gas. Even it if doubled or tripled, it would still be very small. So I wouldn't change anything.

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tokyoleone
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Post by tokyoleone » Sun Jun 29, 2008 4:27 pm

Valuethinker wrote:
Another feature of Japan, I believe, shared with Netherlands and Denmark (but most definitely not UK), is the extent to which they try to make bicycling convenient: eg bicycle racks at every train station (in a country where petty crime is so low, this works better than in the UK, say, where if it is not bolted to the ground, it will be stolen or at least vandalised).
There are in fact so many bicycles that many of the major train/subway stations have no parking zones for bikes - parking in designated areas only. And they do tow away illegally parked bicycles - I've lost 2 this way! You can get your bicycle back after paying a hefty fine (up to ¥5000/$45)

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Post by bolt » Sun Jun 29, 2008 5:03 pm

The Big oil lobbys working on it, its(or 5-7bucks) is already being anticipated.....no more driving for kids! Car insurance........in MA if your under 21, a HS drop-out, buy a fireengine red car, and not working,..... your insurance is UPPED dramatically! At least 20% REALLY!

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Post by UKbloke » Sun Jun 29, 2008 5:14 pm

rob wrote:It' not the direct fuel prices that bother me (apart from winter heating :shock: )... It's the increase in prices of everything. More concerning - what about all the products made with oil (that have no viable alternatives) - it's more common then you would first think once you look?
Don't worry about it. Every indexer is a business owner, and wherever the price increases happen, we will get it in our earnings.

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Post by sopogah » Sun Jun 29, 2008 6:46 pm

Anybody who was ignorant/stupid enough to buy an unneeded gas guzzler as a daily commuter, the time to pay the piper has come.

For everybody else it is just another cost of living increase, food is going up, so less money to spend on gadgets I guess.

I live in Los Angeles, where the public transportation is very thin, and in most areaes it is not convenient or not available altogether, so people do not have much choice but to drive cars.

Many people are buying small cars for daily commute, but many are shocked when dealers are refusing their suv for a trade in.

A friend of mine tried to trade in his Toyota Sequoia, and was upset when the dealer offered him half of KBB's wholesale value.
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Post by Pacific » Sun Jun 29, 2008 7:05 pm

Everything is relative. I am paying $6.79 per gallon of gas and $0.46 per kwh of electricity. So, I have to laugh when I hear all the whining (though I do understand the pain). People get what they deserve (even me!). The fact that a country like the US is importing so much oil when it has oil of its own is mind-boggling to much of the rest of the world.

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frose2
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Post by frose2 » Sun Jun 29, 2008 8:31 pm

Gasoline is not a large part of my consumption, and could be cut essentially to zero by bicycling everywhere. However, I agree with rob and SoonerSunDevil that the inflation arising from the use of oil to grow/make and transport food and other stuff is a much bigger worry.

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Random Musings
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Post by Random Musings » Sun Jun 29, 2008 9:20 pm

Starting to carpool now (2 or 3 times a week), not out of financial necessity (will reduce gasoline expenses by about 10% a year).

However, there are other indirect benefits achieved by doing so....

RM

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Post by TheEternalVortex » Mon Jun 30, 2008 1:39 am

Move to Venezuela (12 cents/gallon)?

What's that? The 30% inflation and quasi-authoritarian government is unappealing? Well...

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Post by Pam01 » Mon Jun 30, 2008 9:37 am

I ride public transit to/from work and only use car for errands and trips and such. $7/gallon does not affect me significantly. Since the beginning of the year, I have started to combine errands more. Not because it saves me much money (my fuel consumption is less than 3% of my total expenses), but I do want to avoid contributing to pollution as much as I can.

Where I live, riding the public transit is extremely convenient, so it is not really a hardship and I get to read the entire commute which has some benefits of its own.

-Pam

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Post by Tramper Al » Mon Jun 30, 2008 9:45 am

I am pretty sure that some great European democracies have managed to survive and thrive for decades with those (and higher) levels of gas prices. It is a coincidence that all these places have far better public transit, smaller and more practical and efficient cars, and well developed urban infrastructures for walking, bicycling, etc.?

It seems obvious that the here in the United States we are not likely to develop these things without the price pressure of more expensive fossil fuels, is it? Didn't we have the last 35 years to do this, but went in the opposite direction instead?

I think it's kind of sad to think that some believe our national unity or sense of "freedom" has to be forever tied to sprawl and waste.

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Post by Polaris » Mon Jun 30, 2008 10:43 am

Alex Frakt wrote:Maybe the Bogleheads are better positioned than others. I bet in general Bogleheads have shorter commutes and drive more fuel-efficient cars than other Americans with similar demographics.
Curious, what does commute length have to do with being a Boglehead?

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Post by Tramper Al » Mon Jun 30, 2008 10:48 am

Polaris wrote: Curious, what does commute length have to do with being a Boglehead?
My guess (stereotype really) is that Bogleheads in general spend less, save more, and retire earlier than the public at large. And many people become Bogleheads only in retirement anyway. So the Boglehead would commute for fewer years, and probably on average select a home site with a lower cost (i.e. distance) of commuting in the first place. And of course the Boglehead might be more influenced by gas mileage in car selection, even in the old days of a cheap, seemingly limitless fuel supply

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Post by Polaris » Mon Jun 30, 2008 11:45 am

Tramper Al wrote:
Polaris wrote: Curious, what does commute length have to do with being a Boglehead?
My guess (stereotype really) is that Bogleheads in general spend less, save more, and retire earlier than the public at large. And many people become Bogleheads only in retirement anyway. So the Boglehead would commute for fewer years, and probably on average select a home site with a lower cost (i.e. distance) of commuting in the first place. And of course the Boglehead might be more influenced by gas mileage in car selection, even in the old days of a cheap, seemingly limitless fuel supply
I agree that Bogleheads in general spend less and save more, but I would think that historically one's geography and chosen profession would have the greatest impact on commute distance (although that may very well be changing now in the era of $4/gal gas).

In my case, sometimes I've had to go to a client site in Maine, while other times I may have to work at a client site in Connecticut or Western Massachusetts. Other than an RV, there isn't really a single convenient place to live that makes for a short commute to each of these sites. :)

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Post by schwarm » Mon Jun 30, 2008 12:00 pm

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Post by gunn_show » Mon Jun 30, 2008 12:50 pm

I clicked change nothing. San Diego has zero quality public transportation and never will, so I have to drive

I will probably drive less or try to maximize errands and routes to conserve and cut down random trips that waste gas. Luckily my new job is 7 mi each way and I am getting better gas efficiency due to the flatness of the route.
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Post by HueyLD » Mon Jun 30, 2008 1:27 pm

..............
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curly lambeau
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Post by curly lambeau » Mon Jun 30, 2008 2:26 pm

Walden wrote:Where is the bike option? :)

I would just keep doing what I'm currently doing: riding my bicycle almost everywhere.
Maybe if it hits $7 then people will remember bicycles when they write these polls. ;)

If it hits $7 I'll just keep riding my road bike. It's cheaper, more fun, and healthier than driving.

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Post by tashina » Mon Jun 30, 2008 2:58 pm

My husband and I both live in Texas and work for different companies in Silicon Valley (from home). Last I figured, our gas costs are 1/2 of 1% of our income (our incomes are not that far above the median, we just don't drive much), so transportation cost increases are not one of the things I personally worry about.

Most of my costs are low, so if my $.10 ramen becomes $.20, my breakfast will not be affected. :wink:

I consider myself pretty adaptable. I already use libraries, thrift stores, etc. so the percentage of my consumed good that need to be trucked to me are minimal. I don't deny that this could all affect me somehow, most likely in increased electricity costs for the swimming pool or expensive pineapple, but I feel relatively well prepared for it.

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Imbusted
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Big Oil Lobby My A**!

Post by Imbusted » Mon Jun 30, 2008 4:28 pm

Bolt Wrote:
The Big oil lobbys working on it, its(or 5-7bucks) is already being anticipated
Big Oil ain't the problem Mr. Bolt. You need to do some reading and find out just what the cause(s) are. Ignorance is no excuse.

financialguy
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Re: Big Oil Lobby My A**!

Post by financialguy » Tue Jul 01, 2008 9:12 am

Imbusted wrote:Bolt Wrote:
The Big oil lobbys working on it, its(or 5-7bucks) is already being anticipated
Big Oil ain't the problem Mr. Bolt. You need to do some reading and find out just what the cause(s) are. Ignorance is no excuse.
Really people should be thanking Big Oil. It's simple math.

The current average gas price is $4.09 a gallon. But that's not all profit. With crude at $142 a barrel, and there being 42 gallons in a barrel, it means $3.38 of each gallon is crude oil -- which is a cost to oil companies.

Now we're down to $0.71 per gallon for the oil companies.

The federal gas tax is 18.4 cents a gallon. After subtracting that, we're down to 52.6 cents per gallon for the oil companies.

The average state tax is 31 cents per gallon, which now leaves the oil companies with... 21.6 cents per gallon.

And we haven't even subtracted out things like refining costs.

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Post by mattduke » Tue Jul 01, 2008 9:31 am

I suspect I will be able to easily outbid most Americans and be in a financial position to buy gasoline even at very high prices. What concerns me is the probability that the politicians will impose some type of rationing system (say, 5 gallons per week). It is in anticipation of this that I have moved very close to work and purchased an 80mpg motorcycle.

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Post by c.Alvin » Tue Jul 01, 2008 10:06 am

I would drive less. Some of us have the option of working from home. :D

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rwcox123
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Post by rwcox123 » Wed Jul 02, 2008 8:35 am

Since we don't drive much (about 5000 miles/year), we'd probably just cut back on spur of the moment "let's go pick up something" one-shot trips. But since I walk to work, and my wife's commute is only 3 miles, there's not actually a lot of room to cut back driving. She could take a bus, but it's not actually cheaper than the gas until gas is about $8/gallon.

Probably we'd take the Metro to go to downtown DC attractions (10 miles 1-way) more often than driving. If we use 1 gallon on such a round-trip, that would be $7. The Metro would be (for 2) 4*$1.85=$7.40 so it would be about a wash in cost (parking is free for us on the weekend).

After thinking it through here, we'd probably not change much except at the margins. We do so little long-haul driving that cutting back won't save much in the way of money or gas.
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Post by White Coat Investor » Wed Jul 02, 2008 4:56 pm

mattduke wrote:I suspect I will be able to easily outbid most Americans and be in a financial position to buy gasoline even at very high prices. What concerns me is the probability that the politicians will impose some type of rationing system (say, 5 gallons per week). It is in anticipation of this that I have moved very close to work and purchased an 80mpg motorcycle.
You actually moved AND actually bought a new vehicle because you actually expect politicians to impose a 5 gallon/week limit on gas?

Seems like a big bet...
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sambuca08
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Post by sambuca08 » Wed Jul 02, 2008 5:23 pm

I don't own any cars, so I selected 'other'. My plan, next year, is to buy a high MPG vehicle fo sho. There will always be people who can or are willing to pay for a ridiculous gas hog, but I want to feel smart as opposed to rebellious and bellicose.

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Post by Valuethinker » Thu Jul 03, 2008 7:40 am

EmergDoc wrote:
mattduke wrote:I suspect I will be able to easily outbid most Americans and be in a financial position to buy gasoline even at very high prices. What concerns me is the probability that the politicians will impose some type of rationing system (say, 5 gallons per week). It is in anticipation of this that I have moved very close to work and purchased an 80mpg motorcycle.
You actually moved AND actually bought a new vehicle because you actually expect politicians to impose a 5 gallon/week limit on gas?

Seems like a big bet...
When the US looked at gas rationing in the 70s, they looked at what did/ did not work in WWII in the US and UK.

'white rationing' does work. You give every household coupons for say 20 gallons per month. However they can sell those coupons in the free market. The government sets the total gasoline consumption of the economy, and then the market sets the price consumers will pay to consume that gas.

Otherwise you get black marketeering.

You would still have problems with counterfeit, of course, and some people will just not be able to afford the gas they need (but that would be true in you just let the market price spike).

Almost certainly gas would only be rationed if supplies fell to say, half of current supplies, so that you would need to have a reserved supply for essential services and deliveries and public transportation.

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Post by shadowrings » Thu Jul 03, 2008 5:11 pm

tommy_gunn wrote:I clicked change nothing. San Diego has zero quality public transportation and never will, so I have to drive

I will probably drive less or try to maximize errands and routes to conserve and cut down random trips that waste gas. Luckily my new job is 7 mi each way and I am getting better gas efficiency due to the flatness of the route.
Ditto for me tommy It almost takes divine intervention to get a pedestrian cross walk installed in the quad city area here when the stop lights are going to be less than a mile apart.

And anti-cyclist mentality can make it hazardous for those that venture off the designated biking trails.

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bozo
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Re: $7 gas - what would you do?

Post by bozo » Thu Jul 03, 2008 7:58 pm

AJ wrote:There is a new CIBC report that predicts $7 gas by 2010. What changes would you make to your lifestyle to handle $7 gas?
I drive very little, maybe 10 miles/week on average. An occasional trip "over the hill" (3 miles round-trip) to the grocery store, once a month to the bank (six miles round-trip), and around the block every other day to keep the battery charged and the pistons lubricated. Gas, as you can see, is not a big expense. So, $7/gal would have little more impact than $5/gal.

Yours,

Bozo

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Post by mithrandir » Fri Jul 04, 2008 8:38 am

I don't know.

It's a shame: I am a cycling enthusiast and pedal over 2000 miles annually for leisure/exercise. It is conceivable that I could cycle to work but after doing the math I just don't see it as a reasonable possibility.

The biggest problem may be the commute distance: about 12 miles each-way. That's not excessive but a 25-30 minute drive becomes a 1-hour pedal. Could I find an additional hour to spending on commuting? Granted, cycling to work is exercise so it does have an advantage but that actually leads to another problem, namely shifting energy requirements from gasoline to food calories.

I figured I would burn 1200 calories on a daily 24 mile bike commute. If I want to maintain my weight (I'm relatively thin as it is) I'd have to eat more so I wouldn't run a calorie deficit. 1200 calories is a lot of food and that costs money. Cycling is not free.

Oh, and you can't carry much cargo on a bike. I pack both breakfast and lunch into a cooler and there's no way that will fit on a bike. You can buy some kind of cargo carrier (which costs money) but they you'd have to move more weight (which slows you down and requires more calorie expenditure).

Need I mention the safety issues with traffic and weather?

So if gas were to rise to $7 my commute would cost about $8 to drive. Cycling would not require gasoline but that $8 would have to be spent on other things, like food and time.

While I don't drive a truck/SUV, I'm not perfectly comfortable with what I drive: a 2008 Subaru Outback wagon. I'm averaging 23.2 mpg so far, hardly a disaster but this is a little low for commuting and $7 gas. But I can't have a small car as my only car. I have an active/outdoor lifestyle and it's going to take a lot for me to change. I'm waiting for some one to produce a cheap small car (under 10K) to use for pure commuting while using the Subaru for "heavier" tasks. But owning two cars costs more at this point than having one with a little substandard fuel economy. Gas is just one ownership expense.

I would give up other things but I will not give up my mobility. This is a common refrain.

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