Tuesday, June 12, 2007

How Much We Spend On Gas

I remember, not too long ago, students at the University of Minnesota complaining about the increases in tuition. They went on protest as uneducated, brainwashed young skulls full of mush are wont to do. Yet, while these poor students will always contest they can't afford the increase in tuition, they certainly seem to have enough money to spend it on beer and booze at the local bars in Dinkytown and Stadium Village. And I always said, "when these bars start to noticed a slip in sales, that will be the true economic sign that tuition costs have risen to the point the students truly cannot afford those increases. In the meantime, increase away."

But we adults are not guilt free either. For we complain about the price of gas, but rarely do we look at our personal expenditures to see exactly how much gas is costing us. So I went to the BEA and pulled the national income accounts to see how much the typical American spends on gas as a percent of their total income and today it is at 2.4%.

Now albeit at a recent high, compared to the 1950's we spent nearly 3% of our income on gas whereas during the oil embargo we spent 3.75%. And we're complaining about 2.4%?

But where we really ought to be ashamed, similar to the college students complaining about tuition when they have no reservations about spending $50 a night on booze, we spend roughly the same amount on clothing and shoes. And this despite a precipitous drop in the real price of clothing as we import textiles from China, India and the Pacific Rim;

Now I don't know about you, but I literally spend no more than $100 a year on clothes. Boxer shorts, jeans and socks taking up the majority of that expenditure. So I can't imagine spending anywhere NEAR the same amount on clothes as I do gas. And sneaking a peek into some of the closets of my female friends, not to mention I don't think I've seen them wear the same pair of shoes twice (ahem, FED EX!), methinks I have found the culprit for the large expenditure on clothes.

Regardless, before you get upset about spending $3 per gallon at the pump, you might want to check to see how much you dropped on that latest pair of shoes or what your tab was last night at the bar or maybe add up how much you dropped on cigarettes this week.


Alfred T. Mahan said...

On a per gallon basis, bottled water costs more than gas, which leads me to believe it's one of the best capitalist moves of all time. I truly admire companies (even the chain grocers) who bottle water, slap a label on it, and charge what turns out to be upwards of $6-$8 per gallon.

Anonymous said...

You're forgetting that the increase in the price of gas goes well beyond the cost at the pump. It effects literally everything we buy or do, which makes the REAL impact much more burdensome on our ability to maintain the status quo. So, I will continue to bitch about the gouging we get from the oil companies until I've been convinced that it's in my best interest, and not theirs and Wall Street's, to manipulate the price of gas without a REAL need to do so...the Douche Bags.

Anonymous said...

I am amazed that even people who I consider quite intelligent have no idea how gasoline is priced. Markets set the price of oil, not the oil companies. If Exxon, in some fit of altruism, decided to sell oil to Americans for $50 a barrel, then Americans could make a huge profit selling it to the Chinese for the world market price. Does it really make sense for oil companies to sell oil below the price offered to them?

Reasons for high gas prices:
1. Demand is higher than supply (blame the Chinese!)
2. No new US oil refineries in 25 years, diminishing gasoline reserves (blame NIMBY'ers)
3. A patchwork of gasoline formulation requirements, making markets inefficient (blame liberals)
4. High taxes; I believe state taxes in most states are higher than oil company profits (blame liberals again)