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I just bought a new 2008 Chevy Silverado Crew Cab and have been taking some heat for it from friends and on my blog where I wrote about the purchase experience, how I got a great deal, and the experience of interfacing with dealerships..
The main themes: "How shortsighted", "wouldn't a smaller vehicle have worked?", "You'll regret it", "gas prices will eat you alive", etc. Even one "I thought you were smarter than that".
Does anyone do the math on these sort of judgments? I did. Here is what I came up with.
Assumption: $3 per gallon was higher than we liked a year ago, but it didn't generate the hysteria and behavior modification and purchase modification that $4/gal. seems to be creating, so I base my comparisons on $3/gal vs. $4/gal.
Case Study 1
I drive about 1300 miles a month in the truck. It gets 15 mpg so far (same as the old one - 2001 Silverado).
That’s 86 gallons of gas per month that I purchase. At $4 vs. $3 per gallon, I’m paying an additional $86/mo. over last year to drive my truck. Nobody thought less of me a year ago.
Had I purchased a smaller car that gets 30 mpg, I’d be saving $43 per month. That’s not enough savings to forfeit the advantages of driving a truck. (I have to have a truck in my occupation).
My judgment: people who are trading in their 15mpg vehicles for economy cars probably spend way more than $43/mo on discretionary things, such as eating out. I don't think people actually sit down and look at written numbers on paper when determining where the best place to achieve savings would be. Instead, there seems to be an irrational emotional fleeing from low mpg vehicles to higher mpg vehicles with no attention paid to where the break even point might be on the transition costs, or whether there are other, better ways to find find the savings.
Case Study 2 - Summer Vacation
I hear on the news and read that "people are staying home" this summer because gas prices are making travel too expensive. Really? Let's do the math.
My family will be driving from Texas to Maine this summer, and back. It will be about a 20 day trip, through Wash DC and NYC also. It's 2200 miles each way, 4400 total. Add in detours and side trips and call it 5,000 miles of driving.
At 20 mpg in our minivan, we will need to purchase 250 gallons of gas, which means our summer vacation this year will incur fuel costs of $250 more than the same trip would have cost last summer.
Sorry, but between the hotel stays, eating out, entertainment and attractions, etc., $250 is a drop in the bucket and is hardly an amount that would derail a family vacation. We could pack the tent and camp out a few nights instead of staying in the hotels and B&Bs, and we'd make up more than the excess fuel charge. We could stay in cheaper motels on the overnight driving legs of the trip. We can pack more sandwich material and eat out far less while on the road. There are multiple ways that the average family could offset the increased fuel costs of a trip.
So, I think the media hype is getting to people. Get out a calculator and do the math before canceling a vacation.
Steve
Last edited by austin-steve; 06-01-2008 at 01:11 PM..
Reason: typos
I can tell you where it can help though. A single person working a Part Time job has a truck that gets 10mpg. They can buy a Motorcycle or Car for under $2500 that gets 35-60mpg. That would help.
Agree, the only people that high fuel prices are hurting are those who are spending a large amount of their budget on fuel costs.
Considering I am maybe spending 5% of my monthly budget on fuel (have not calculated, just guessing) the price increase is not that big of an efftect.
People who are getting effected the most are those ones who bought more then they should of in the first place. To budget 10% or more towards fuel a few years ago is ridiculous, those people are really suffering now.
Those who budgeted less than 10% are feeling effects of course, but not as drastic as the media would like everyone to think it is.
The media loves slicing out a segment of the population that mishandled their money and making it out like the whole country is in the same situation. The housing crisis is a good example of that one. Many people using houses as investments got caught up in the downward spiral and couldn't sell and make a profit, cry, cry. Others should have not been getting loans in the firs tplace and they should have at least read the loan terms instead of crying about it later.
I agree with your post, for the most part. What remains to be fingered out is if the gas will stay at 4$. If it goes to 6$ or more, then less and less people will be able to afford to drive anything but more efficient cars. if you need a truck, you need a truck. If it makes you money, then its value is hard to argue with. The little trucks dont do much better on gas. Ive wanted a Nissan Frontier forever. My boss has it, and I showed him how to do his mileage, and it gets 17. Hardly off from your 15.
What i find interesting is that a 2008 truck gets the same mpg as the 2001 counterpart.
The people that are giving you crap about the gas the truck uses, are possibly jumping on the 'we may run out of oil' tip. Which is true. we may. I only hear people bitchin about the price tho, not that. But we simply do need to start using less and finding more efficient ways to use what we do, for the whole greater good thing. Someone in another thread said he tax and high prices is the best thing ever, which I disagreed with at first. But now that you look at it, we need to have people thinking about what they use and drive. And the prices may also make other energy options become developed or more viable, that may be the key to the next 100 years, who knows. Whithout the need, it wont happen.
I agree with Steve that many of us are NOT hurting. The people that are hurting are the 40% or so of the population who are "living on the edge". For whatever reason, low earnings (lots of them) pi**-poor money management (many if not most of them).
One problem I have is the line about "gas was $3/gallon a year ago". I was living in Austin then and I wasn't paying anywhere near $3, closer to about $2.25-2.30. However, I'm pretty sure that the price in Austin now is pretty close to $4/gallon, so let's us $1.50/gallon difference. It doesn't change the reasoning, just the severity.
People like you and I who can afford 3 week, cross-country driving trips notice it, but aren't truly "hurt" by it. The poor "working class slobs" (not meant derogitorily) who built their suburban, or worse-exurban lifestyle around cheap gas are noticing that driving an one ton truck (in which they never haul anything more substantial than groceries) to commute 50 miles each way, was not a good idea.
In the 20th century the US was a world power on the back of control of a very cheap source of power, petroleum.
In the 19th century England was a world power on the back of control of a very cheap source of power, coal.
In the 18th century Holland was a world leader on the back of control of the primary source of power, wind.
When you compare the three countries, population type, density, etc there is really not that much in common to have lead someone to look at the country and say; "that group will lead the world". But they did.
Makes you kind of want to start investing a larger part of our GDP in developing another source of power, wind, geothermal, solar.
Agree, the only people that high fuel prices are hurting are those who are spending a large amount of their budget on fuel costs.
Considering I am maybe spending 5% of my monthly budget on fuel (have not calculated, just guessing) the price increase is not that big of an efftect.
People who are getting effected the most are those ones who bought more then they should of in the first place. To budget 10% or more towards fuel a few years ago is ridiculous, those people are really suffering now.
Those who budgeted less than 10% are feeling effects of course, but not as drastic as the media would like everyone to think it is.
The media loves slicing out a segment of the population that mishandled their money and making it out like the whole country is in the same situation. The housing crisis is a good example of that one. Many people using houses as investments got caught up in the downward spiral and couldn't sell and make a profit, cry, cry. Others should have not been getting loans in the firs tplace and they should have at least read the loan terms instead of crying about it later.
I am of course excluding the commercial sector.
you do know that fuel prices also factor into other consumer goods and food? You do realize that they must drive consumer goods to the stores etc. They must ship goods from abroad on boat and airplane. As time goes on those increased cost will have to be passed on to the consumer.
Of course, you could have bought something that got more than double what the Silverado gets in gas mileage and saved money for when gas it $7 a gallon, instead of driving what is, in essence, a luxury vehicle given the gas mileage and cost. (According the the EPA, the 4wd crew cab 6 liter gets 13/17 and costs around $30,000 - and because of the weight and engine size is one of the worst polluters.)
I agree, but only conditionally. In my observational experiences, I would say that in recent years a majority of heavy trucks and SUV's are being used by people who do not really NEED that type of vehicle. These are the women driving to their manicurist, the grocery store and to drop little Johnny off at school (no, not little Johnny and five of his friends from the neighborhood). The men who think that their sex appeal increases proportionately with the size of their vehicle and how many cylinders and how much horsepower it has. These are the people who others are justified in saying "how shortsighted" or better yet, "how self-centered".
People who absolutely have a legitimate use for a large truck or SUV for their work shouldn't take flak for it. In some cases I know that these same people would rather be driving something more efficient (and often do for their needs outside of work), but just simply don't have much of a choice for the things they use it for.
Still, this is not an excuse for demanding better technology for these types of vehicles. No gas mileage improvement over a seven year period seems like a big let down to me. There will always be room for improvement, but if no one is demanding it, it may never come to fruition.
But no matter how we look at it, everyone will have an eventual breaking point with gas prices. There does exist a number at which the price of gas will be too high to be using an inefficient vehicle for day-to-day tasks, even those of us who are not hurting right now. And it truly IS shortsighted to think that the prices are going to be going down in the future.
According the the EPA, the 4wd crew cab 6 liter gets 13/17
I have the 5.3 Liter. It's holding steady at 15mpg so far. It's essentially a Tahoe with a truck bed. Next year, Chevy should have some trucks with hybrid engines also.
Quote:
you do know that fuel prices also factor into other consumer goods and food?
Of course. I'm just talking about vehicles and the cost of getting to and from destinations though.
Quote:
There does exist a number at which the price of gas will be too high to be using an inefficient vehicle for day-to-day tasks, even those of us who are not hurting right now.
I just showed a house this morning to someone who lives in Wimberley (45 minutes outside Austin) and is moving into Austin ,where he works. He's been out there for 7 years and loves it. But he told me he'll save $350/mo. on gas at today's prices and he doesn't want to sign another 12 month lease, so he's moving closer in.
I think if prices to keep going up we'll see similar modification of lifestyle and driving habits. I also still think the media is hyping the small few at this point and making things seem worse than they are. A lot of us can trim budgets in multiple other ways alos.
The Media hype is in the causes of gas price increases. The articles on "record oil industry profits" or badly researched and speculative articles on Bush connections to the oil industry or the Saudi's has 90% of the population believing it is:
1.) American oil industry gouging the public
or
2.) Bush's fault
or
3.) Combination of the 2.
So we get post after nonsense post of rants about the oil industry or how it's all Bush's fault and once *fill in your candidate here* gets elected then gas prices will automatically drop.
What people don't understand it the complex relationship of supply and demand, investment hedging, and dollar valuation...and about a dozen other factors not related to politics or how much a CEO is making.
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