The world is obsessed with the high price of oil and gasoline. High prices are the result of exponential demand in China and India along with limited "output" capability of the oil companies of the world.
When you fill up your car with gasoline, 15 gallons of gas will cost you $60. That is a shocking number especially as you reach in your pocket to pull out three $20 bills. It makes you want to puke! But it is what it is. It helps to think about it in terms of "incremental" increase versus one year ago. The difference today is gas is approximately $1 per gallon higher than last May. That means on 15 gallons of gas, you now pay $15 more than last year. That still is a lot of money but it is not as shocking as paying the $60 total tab at the filling station.
So let me see! You drive 15,000 miles per year. If you average 20 miles to the gallon, you will use 750 gallons of gas a year. If you are paying $1 per gallon more for gas this year (the incremental increase), your total living cost for the year went up $750. That is $15 per week. It is hardly going to break the average family but it might eliminate a visit to McDonalds or cut out an occasional Starbucks lite vanilla latte with whipped cream topping.
There is a danger with trying to soothe your feelings with incremental cost rationalization. The incremental cost of gas is forcing plastics companies to pass on higher plastic costs (plastics are oil derivatives). McDonalds is going to raise prices because it costs more to transport products to their stores. The U.S.Postal Service will increase stamp prices because it costs more to operate their motorized fleet. The more I think about it, we can go broke by absorbing incremental costs.
The lesson Grasshoppers is that the increase in gas prices does need to be put in perspective. It does change the way we all spend money. There are ways to adjust. Some are painful. Some just make common sense. It seems to me though that the cost of energy is here to stay!
A friend of mine would say "when I think about something like high energy prices, it hurts. So I don't think about high prices". It is stupid logic, but I think for just today I won't think about high incremental gas prices. There, I feel better.
Love,
Dad