So I was just watching some talking heads pontificating on the news, and the topic du jour was the roaring economy despite the high gas prices. These pundits were trying to figure out how, how on Earth, how is it possible that the Dow Jones is climbing, business is booming, and people are working, despite the incredibly high gasoline prices ("damn it," I could almost hear them say, as in "damn it, why can't the economy tank so we can blame Bush?").
They talked about interest rates. They talked about the national debt. They talked about tax cuts for the rich. They talked about the war for oil.
But there is one thing they didn't mention: for most people, high gasoline prices are merely a nuisance, and not a reason to stop spending money.
Yes, that's right. I said that.
Let's do some math:
The average person drives about 12,000 miles each year. That works out to 1,000 miles per month. Now, let's say your average car gets about 20 miles per gallon. That works out to 50 gallons of gasoline each month.
Now, if gasoline prices climb 50 cents, that works out to an increase in your expenses of...
$25 per month.
That's an annoyance. But that is hardly a deal breaker. That's one night at the movies. Or that's one steak dinner. Or that's one Britney Spears CD. This is not the difference between buying that second house on Cape Cod or not. This is not the difference between Bennington and Fresno State. This is not a reason to put off that big screen high-definition television set one more year. This is not a factor in your big-dollar spending.
Nor is it significant in terms of the cost of business. Sure, higher gas prices mean higher shipping costs. But the difference is not really nearly as much as people think. It's not like every product in commerce is out there in a bunch of passenger cars, each one sucking up gas. No, most of what is traveling in commerce is in the massive trailers of diesel trucks, on board 100 car trains, etc. Yes, the cost of one trip across country goes up with the price of fuel. But that cost is spread out over an average of tens of thousands of units per shipment. Think about it: a 50' trailer might easily have 10,000 widgets boxed up inside. If the cost of a single shipment goes up $100 due to the increase in fuel cost, that cost is spread out over all 10,000 widgets. That means a penny a piece.
Anyone who tries to tell you that the high gas prices are driving up business costs is full of it. The impact on individuals driving passenger cars is far more significant, and as demonstrated above, the impact on the individual driver ain't that much.
Now, who is hurt the hardest by an increase in gas? Not the big SUV drivers. If you are driving a brand new Suburban, odds are you have enough disposable cash that even an extra $50 each month (since you are getting more like 10 mpg than 20 mpg) isn't going to hurt you. The payment on something like a new luxury SUV can easily surpass $500 each month, with another $100 or more each month on insurance. In comparison, the increase in fuel costs from a 50 cent spike in gas prices is meaningless.
I have no sympathy for luxury SUV drivers because they feel no real pain. No, the hardest hurt are the people driving around in 1982 Plymouth K cars, working for minimum wage. These folks need that extra $25 a month.
But guess what? These folks are the most likely to be smokers. And a carton of smokes runs about $40 these days. A pack a day smoker, once you add in lighters and stuff, can easily spend over $100 each month just keeping the habit going.
If people have to start choosing between cigarettes and driving to work, hopefully they will choose work over tobacco. Maybe higher gas prices will result in fewer deaths from lung cancer.
Guess what else? These folks are also the most likely to have a refrigerator full of beer. A case of beer, even cheap beer, runs more than $10. I've known plenty of blue collar folks who go through a case of beer (or more) each week. Well, that's about the same as the increase in gas. Maybe higher gas prices could result in reduced obesity, fewer DUIs, and less domestic violence.
But you won't hear pundits saying low income folks need to cut back on the beers and smokes. No, you'll hear them talking about "tax cuts for the rich" and "blood for oil" and "runaway gas prices." That's because they don't want to actually advocate relief for the working poor. No, they want to create class envy, because liberals count on the working poor to vote for democRats. Rather than tell people to stop spending hundreds of dollars each month on alcohol and tobacco, they tell people that Bush is to blame for high gas prices without offering any real solutions to the problem.
Am I wrong?
I doubt it. So next time you hear some talking head rant about the runaway gas prices, ask yourself, "what is this guy's agenda?" Because odds are, if you hear some pinhead on TV talking about the gas "crisis," you are simply hearing someone looking for another way to tar and feather George W. Bush.