To absolutely no one’s surprise, the price of gasoline is on the rise again, just in time for the holidays. The driving factor is the current price of crude oil, which has now topped $90 per barrel. It doesn’t matter that the gasoline already in the system was refined when oil was less expensive; what matters is that people drive more at the holidays, so retailers can charge more for the product. In fairness, I’m sure gasoline suppliers are charging more to the retailers already, so feel free to pass the blame up the food chain. I know from first hand experience that the gasoline retail business is not for the faint of heart, and only casinos are more relentless in their pursuit of profit than oil companies.
Most of us can absorb a pretty significant increase in the cost of gasoline without any major re-budgeting. Still, there comes a point when you have to take a step back and ponder your options, which may include driving less (fat chance), taking public transportation (if available to you) or even buying a more fuel efficient vehicle. I used to drive around 45,000 miles per year, including 27,000 miles per year just for my commute. At $2.85 per gallon for premium unleaded (in 2007) and with a fuel economy of 26 miles per gallon, I was spending nearly $5,000 per year on gas. Had the price of gas risen by $0.50 per gallon, my costs would have increased by nearly $800 per year, or roughly $67 per month. That would have translated to one less dinner out, but really wouldn’t have changed my life much. At $5.00 per gallon, however, it would have been an entirely different story, and the car would have been parked for all but essential trips. I’d have been racking up miles on the motorcycle, which averages better than 40 mpg.
I suspect we haven’t reached the tipping point yet, at least not for most people. Historically, gas goes up in price, then it comes back down, so most people choose to wait it out and maybe drive a little less when gas is expensive. Here’s my question: what do you pay for gas in your area (regular or premium), and at what point would you start considering other options for transportation? At what price would you consider buying a more fuel efficient car, or even a hybrid? Is there a price at which you’d call gasoline “too expensive”?