Stop Whining About the Price of Gas

I am getting fed up with everyone talking about the price of gasoline. Sure it's over $4.00 per gallon, and it is getting really expensive to fill up our gas guzzling vehicles. But instead of complaining about the price of gasoline, we should instead be complaining about the cost of driving a mile.

You see, I would not care the least bit if gas went to $5/gallon, if my vehicle could get 80 miles per gallon. That would equate to roughly 6.25 cents per mile for gasoline. But automakers continue to produce cars based on ancient technology that barely gets 30 miles per gallon. Most Northland drivers in their SUVs and pickup trucks are lucky if they get 15 mpg, so they are paying about 33 cents per mile driven, just for gasoline.

CAFE Standards Have Not Changed in Over 20 Years
The Corporate Average Fuel Economy (CAFE) standards for cars has not changed since 1985, when the target was established as 27.5 miles per gallon. Okay, it did change for a couple of years, when our wise leaders actually lowered it to 26 mile per gallon, then they "raised" it back to the old 1985 standard. Even the proposed new standards for the year 2015 and 2020 do not raise the standards above 36 mpg. So automakers will have no legislative incentive to produce a fuel efficient car. Only the market forces will compel them to give us vehicles that get high fuel economy.

Efficient Cars Can Be an EASY Reality
If does not take rocket science to produce cars that can get 50 plus mpg. Nor does it take hybrid gimmickry. It's really quite simple. Just shave several hundred pounds off the weight of the car, and cut back on the horsepower. Think about it. Twenty five years ago, Japanese car makers were turning out cars for sale in the good old USA that averaged 45 mpg without "hybrid" gimics. Sure, they did not weigh in a 4,000 lbs curb weight, but they were well built and reliable and got great mileage. I get irate when I see automakers now boasting about cars that get an "amazing" 35 mpg. What a disgrace. It's twenty-five years later, and the mileage has decreased 20%.

Do you really need to go from 0 to 60 in six seconds flat? Do you really need to have the protection of a Sherman tank as you drive down the road? I would suggest not. But car makers have succeeded in scaring the bejeezes out of us. We are afraid that every day we are going to get broadsided by a SUV and that our 5,000 lb SUV is going to save us. Well, I ask you, how many times have you been hit by that big SUV?

If we all drove smaller lighter cars, and avoided being hit by semi trucks, we could cut our fuel consumption in half.

Wally World Opened Last Week

Well, it's here--"super walmart". Apparently, the folks in Bentonville were not satisfied with the amount of money they were sucking out of the Grand Rapids economy, so they had to upsize. And judging by the crowded parking lots, Grand Rapidians were eager to help out.

The new walmart supposedly has everything under the sun for sale inside its monolithic temple to shopping. I cannot actually attest to this from first hand witness account, as I have been "walmart free since 2003". But a drive by glance of the exterior revealed a home and garden center, the regular walmart stuff, a liquor store, subway restaurant, grocery store and an automotive center.

I hope this does not bode poorly for the local businesses that survived the original onslaught from walmart. Can our small city support 4 large grocery stores (Cub, Ogles, Target and walmart)? Kmart seems to be just barely hanging on - I cannot believe they have lasted as long as they have in the face of walmart and Target expansions.

By now you can probably tell that I am not a big fan of walmart. Here are a couple of interesting links that help show how I formed my opinion about walmart:

• PBS Frontline store about walmart
• JibJab Big Box Mart
• Wakeup Walmart

Why Gas Prices Will Continue to Rise...

The price of gasoline has everything to do with demand, and little to do with supply. In particular, it is the price elasticity of demand that is driving gas prices higher.

Our demand for gasoline is what economists would describe as extremely inelastic. This means that as the price of gasoline changes, the demand does not change much. Think about it. The price of gas could drop to 50 cents per gallon, and we would not change our consumption much. Sure, you would go and fill up your tank quickly, but you can only drive so much, and you are not going to burn an extra 100 gallons each week just because the price of gasoline went down. Likewise, a raise in price to $4.50 per gallon would not cause most of us to decrease our consumption much. We are married to our vehicles, and need (sic) to drive about the same this week as next week, even at higher costs.

So, because the supply of gasoline is controlled by an oligopoly, they can charge whatever they want for a gallon of gas, and we will pay it and not make much of a change in our consumption patterns. Granted, there is a breaking point at which Americans will earnestly start consuming, but your guess is a good as mine at what dollar amount that will be.

We certainly are not there yet. Get on a freeway and watch the 6,000 lb luxury gas guzzling SUVs fly by at 80+ mph.

Everyone's and Economist

The purpose of this blog is to provide my thoughts about economic issues facing us in our everyday lives. Some topics will cover deep significant issues, while others will address issues that some might consider trite.

I hope you enjoy reading these posts, and that they evoke some thought and dialog.