Last Friday morning I was reading several articles in the Wall Street Journal written by economists who thought that we're finally at the point when oil prices were stabilizing and we should see a drop in retail oil prices. On the same day, someone somewhere in the Middle East said that an attack on Iran is inevitable and that caused the oil to skyrocket to $138/barrel. The prices jumped $11 in one day (remember the day when it was the price of a whole barrel?). We may not see a spike in retail prices for a week or two (retail prices lag behind market prices by a bit), but don't expect your gas bill to go down any time soon. What do economists know?We can't control the markets, and unfortunately, living in the States, we can't just stop driving and start taking public transport everywhere (for comparison, I never drove living in Moscow, there was no need to). Our pay does not increase whenever gas prices jump, but the life is getting more and more expensive, since oil is a live blood of this country.
I don't know how you all feel about gas prices, but Becca and I are at the point when we feel it is time we do something about it. First, last year we upgraded our cars to more efficient vehicles. My Civic gets 35 miles a gallon on a freeway versus 25 I used to get from my old Prelude. Second, we are driving together as much as possible. Third, we decided to cut on other expenses by switching to cheaper cable, better cell phone plan, cheaper car insurance (yes, we actually did switch to Geico and saved 50%!), eating out less and drinking water with cereal instead of milk. Fourth, we will take less road trips this year than we used to. It's getting too expensive to drive out of town.
Personally I predict that the oil will hit $5/gallon in Northern California by July 4th. However, there are plenty of ways to deal with this oil crisis and someday we'll recover. America will finally begin using more of its own oil. We'll see more public transport in use. We'll use alternative energy vehicles. Until that happens, we'll all have to find our own ways of dealing with these rising costs.
How are you dealing with these new gas prices?
7 comments:
It's frustrating how all someone has to do (like the man somewhere in the Middle East) is SAY something negative and the price goes up! I wish I there was a good mass transit system that we here could use, but for now we, like others, just have to ratchet back our spending on unnecessary things. I just read yesterday about how much OPEC controls the price of oil simply by increasing or decreasing production. I wish they would choose to increase it!
This must be an old pic, because the gas is now $4.45, 4.55, 4.65!!!!
It is ridiculous! Sure wish we would've got the hybrid model instead...
I just about cry every time we fill up the gas tank. Josh and I are walking every where we can now to buy produce, pick up Little Caesars, etc.
I'm amazed at how an Israeli comment on National Television about Iran, coupled with an estimate from a Merrill Lynch analyst can make the market move with the single largest gain in history. DIdn't the market pay attention to the news reports which outlined how public transportation increased 3% in the last three months of 2007 and another 6% in the first quarter of 2008? What about the inventory report earlier this week which showed that American's used less fuel? Or, the Memorial Day weekend report which outlined how 80% of American's stayed home for the weekend, instead of taking the historic camping trip to 'kick of summer'? Why does the market react so violently to issues on the supply side of the equation? Yet, when the demand side of the equation is inversely affected, the market takes a sleeping pill on the data. Something isn't right!
It's also amazing when the government issues a report which outlines that they have been investigating speculation in the market since December, then the price of oil drops drastically! I do understand how speculation in the market has increased the price above the 'normal' market price given the supply and demand curves, but then again, I'm an accountant, not an economist. But given the facts, I know two 'investors' who use oil as a 1) hedge and 2) speculative profit taking. Don't they know that their speculation in the market is hurting not only the U.S. economy, but possibly the global economy, all for a buck here and $11 there?
I've got so much more...but someone has to show me how to start a blog of my own to vent specifically about this issue. I think I've got enough information to cover at least 2 pages...
On another note...want to carpool?
I know it's good to cut back on costs, but please tell me you're really not eating your cereal with water instead of milk! Maybe you could get a milk cow--do they allow that where you live?
Thank you for your responses, everyone. I hope the prices will go down eventually, yet at the same time I'm appalled at comments from some of the car dealers recently who want the prices to stay high. They no longer care about selling SUVs, but they know that they can now sell hybrids quite easily. If prices go down, people will keep driving their current cars.
Aaron -
Those people who help prices to go up will one day regret that as we eventually switch to alternative fuels and people forget about gas cars. I think they're shooting themselves in their feet right now.
Shauni -
Well, I exaggerated a bit, but I do eat cereal with juice sometimes when mils runs out. Buying a cow is a good idea though! It's our answer to the one celebrity who has an oil farm on his property.
http://www.fiskerautomotive.com/ - Travel 500 miles on $5 fuel ($.50 electricity + $4.50 gas). NIce idea, although the car is $80,000.
http://hybridtechnologies.com/ - All electric cars, starting at $40,000. Travel 100 miles on a charge which costs about .80 cents.
http://www.phoenixmotorcars.com/index.php - All electric Pickup/SUV. In 2009 it should be able to go 250 miles on a single charge. $47-54k though.
Maybe one of these companies will be the pioneer that takes down BIG OIL.
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