Tuesday, November 06, 2007

So when are we going to do something about it?

Heard about a recent poll, and wanted to check it out for "reals". This recent poll shows that 63% of Americans responded yes to the question, "Have recent price increases in gasoline caused any financial hardship for you or your household" (italics are mine). If you scroll down this page, you will see that people have been feeling this pinch and cognizant of it for some time. The best part is the "who is to blame" question that shows 20% of people blame Prez Bush, and only 4% blame American drivers. Let's wake up people. In 14 months or so, we won't have Bush to kick around anymore. We'll need to face our problems for real. Gas prices are based on supply and demand, if demand keeps going up, then would not the drivers be partly to blame? Jesus, I feel like I am taking crazy pills.

Notice that nearly half of respondents have not changed their behaviors despite this causing hardship. If something causes hardship, it causes extreme privation or suffering. I am pretty sure a hardship would cause a change in behavior. We, as a people, have to either redefine how much this is bothering us, or act in a way that reflects that we value this as a hardship. I bet it really is just an "annoyance" right now for most folks. Why do I say that? Look at this graph. Light trucks have worse mpg ratings and can also be defined as SUVs. I know SUVs have a place in the market because of snow driving and portions on the nation that need 4 wheel drive for access (my home state especially). I also think we all can agree that the SUV craze of the last 15 years has baptized a lot of suburban and urban warriors into the SUV ranks. No, you do not need an SUV in Newton, Massachusetts. This data does not show a decrease in light truck sales. The year so far seems mostly in line with 2006, and not far off of 2005.
I'm waiting for the big change in behavior. I know markets work pretty quickly, so if this is such a hardship, do something about it. Don't just bitch. Think about this folks: a car that gets 24/32 mpg will use roughly half the gas of an SUV that gets 14/20 mpg. Stick with me through this crude math, but say the city mpg difference (the 14 vs. 24) over 15,000 miles in a year, equates to roughly 450 fewer gallons of gas a year. At $3 a gallon, which is causing such a hardship, this equates to nearly $1500 a year. I would love an extra $1500 a year. Gas is not going back down to $1 a gallon anytime soon, so the money you'd save over the life of a car (roughly 7 years) would be ~$10,000. I seriously do not understand why people would not switch what they are driving to save the money on gas. I know some people need trucks for jobs; that's cool. I also know that a lot of Moms and teenagers drive SUVs for the safety reasons. Look, if anyone should be worried on the road it's not you guys. It's the rest of us who have to watch out for your horrible driving armed with a 6,000 lb vehicle.
As my friend's mom used to shake her finger and say "Quit-cha-bit-chin". Do something. The gas will only be priced that high if the demand is there for it. I know it is a more inelastic demand (econ speak), but any changes can make an impact.
***Like refusing to buy anything made in China. I like that idea, and want to take it one step further. Many Americans own mutual funds through our 401ks. Many mutual funds have shares of Mattel. I say we use this shareholder-ownership power to write to demand they bring Chinese products to safety requirements or bring the jobs back to the Americas. Sounds like a movie, but I think it might work. Every journey starts with one step.

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