Gas Gouging, Gas Prices, Minimum Wage, Oh My!
Another day has past, and another 84 million barrels of oil we have consumed. Each day, this limited resource gets sucked down, bit by bit, by our "civilization". Gas gouging and gas prices are on the tips of everyone's tongues, but is peak oil a term most people understand. Not yet.
As I was driving home from another visit to the big city, gas prices of $3.64 made my fill up cost nearly $60. That's more than twice as much as I had ever paid for a fill up, that is up until peak oil started to come onto the scene.
Scenario 1 - The Jeep Grand Cherokee
I wonder, what would it be like a nice new 2007 Jeep Grand Cherokee 4WD SUV. Wowzers, they get about 13 miles per gallon. At the rate of $3.40 per gallon, that's over $3,900 for gas in a typical 15,000 mile year. Imagine paying $75 bucks a week for gasoline. A few years ago, it would have been only $30 per week. Where does that extra $45 per week come from? What would this new "car" owner have spent that money on, if not for gas? Perhaps an additional $180 per month isn't a big deal for some... but for the folks working day in and day out, its still a nightmare.
My second dinner at Taco Bell in a row, I asked what the folks were getting paid. "Minimum wage" was the reply... that's about $7.00 per hour. For a 40 hour week, that's $280 dollars a week, or about $1,200 per month. Let's imagine a that person brings home $1,000. How would one budget for a job like that?
$500 - Rent & Utilities
$300 - Food
$100 - Car Insurance
$100 - Gasoline
So what happens when someone living month to month finds that their cost of gasoline is going up. Can't reduce rent very easily. Could cut back on food -- perhaps more eating in? Or maybe more Taco Bell? Maybe work another job? It starts to get tough.
Lucky thing that a minimum wage person doesn't have the money to buy a Jeep Grand Cherokee 4WD. Unfortunately, I know quite a few folks that bought used pick ups or SUVs that get about the same mileage.
Scenario 2 - The Six Gallon Week
Let's take an example from this year in Michigan. Back in January, for several weeks, the price returned to a time to $2.00 per gallon. Let's take a person who has a car getting 25 mpg, and driving 30 miles round trip to and from work each day. That's 150 miles per week, or about 7,500 miles in a year.
This person burns 6 gallons per week. Let's suppose they only put in that much each week. At $2.00 per gallon, that's only $12 per week, or $48 per month. But, at $3.65 per gallon, it's about $22 per week, or $88 per month.
Again, what are the options? No sports for the kids? Less food at the shopping market? Pay the rent a few days late? Hold off on the utility bill? No more DVD rentals? Cut the cable?
While an extra $10 per week would be negligible for some folks, those living on a week-to-week basis might find it to be the straw that breaks the camel's back.
Gas Gouging Today?
Michigan's $3.65 gas prices is not due to gas gouging, its due to peak oil, and the volatility that peak oil is putting into the market. Take a look at the following graph of the amount of gasoline in our U.S. stockpiles...
What does one get from this? Recall that back in January-February, prices were down to around $2 per gallon. Did this relatively low price level get people buying, thinking that they would win the lottery of low prices again? Did this lead to the fantastic drop in the gasoline stockpiles? Is this leading to the rapid increase in prices now?
Take a look at the figures at the bottom of this page, comparing gasoline supply to demand...
http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html
We are buying more gasoline than we were last year... but our gasoline production (U.S. refining plus imports) is less than last year.
Supply and demand. Any wonder gas prices are rising?
As I was driving home from another visit to the big city, gas prices of $3.64 made my fill up cost nearly $60. That's more than twice as much as I had ever paid for a fill up, that is up until peak oil started to come onto the scene.
Scenario 1 - The Jeep Grand Cherokee
I wonder, what would it be like a nice new 2007 Jeep Grand Cherokee 4WD SUV. Wowzers, they get about 13 miles per gallon. At the rate of $3.40 per gallon, that's over $3,900 for gas in a typical 15,000 mile year. Imagine paying $75 bucks a week for gasoline. A few years ago, it would have been only $30 per week. Where does that extra $45 per week come from? What would this new "car" owner have spent that money on, if not for gas? Perhaps an additional $180 per month isn't a big deal for some... but for the folks working day in and day out, its still a nightmare.
My second dinner at Taco Bell in a row, I asked what the folks were getting paid. "Minimum wage" was the reply... that's about $7.00 per hour. For a 40 hour week, that's $280 dollars a week, or about $1,200 per month. Let's imagine a that person brings home $1,000. How would one budget for a job like that?
$500 - Rent & Utilities
$300 - Food
$100 - Car Insurance
$100 - Gasoline
So what happens when someone living month to month finds that their cost of gasoline is going up. Can't reduce rent very easily. Could cut back on food -- perhaps more eating in? Or maybe more Taco Bell? Maybe work another job? It starts to get tough.
Lucky thing that a minimum wage person doesn't have the money to buy a Jeep Grand Cherokee 4WD. Unfortunately, I know quite a few folks that bought used pick ups or SUVs that get about the same mileage.
Scenario 2 - The Six Gallon Week
Let's take an example from this year in Michigan. Back in January, for several weeks, the price returned to a time to $2.00 per gallon. Let's take a person who has a car getting 25 mpg, and driving 30 miles round trip to and from work each day. That's 150 miles per week, or about 7,500 miles in a year.
This person burns 6 gallons per week. Let's suppose they only put in that much each week. At $2.00 per gallon, that's only $12 per week, or $48 per month. But, at $3.65 per gallon, it's about $22 per week, or $88 per month.
Again, what are the options? No sports for the kids? Less food at the shopping market? Pay the rent a few days late? Hold off on the utility bill? No more DVD rentals? Cut the cable?
While an extra $10 per week would be negligible for some folks, those living on a week-to-week basis might find it to be the straw that breaks the camel's back.
Gas Gouging Today?
Michigan's $3.65 gas prices is not due to gas gouging, its due to peak oil, and the volatility that peak oil is putting into the market. Take a look at the following graph of the amount of gasoline in our U.S. stockpiles...
What does one get from this? Recall that back in January-February, prices were down to around $2 per gallon. Did this relatively low price level get people buying, thinking that they would win the lottery of low prices again? Did this lead to the fantastic drop in the gasoline stockpiles? Is this leading to the rapid increase in prices now?
Take a look at the figures at the bottom of this page, comparing gasoline supply to demand...
http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html
We are buying more gasoline than we were last year... but our gasoline production (U.S. refining plus imports) is less than last year.
Supply and demand. Any wonder gas prices are rising?