The Wonder Of Fuel Points

When I first started driving, back in 1973, I think the price of regular gas was about 27.9 cents a gallon.

IMG_3442Then the first oil embargo occurred, and gas prices skyrocketed to — oh, I don’t know — maybe 55 cents a gallon?  And the nation was outraged.

In those long ago days, the idea that Americans would pay more than $60 to fill up their gas tanks would have been absolutely ludicrous.  Now, unfortunately, it is commonplace.

Which is why I felt young again when Kish and I stopped to fill up the tank at Giant Eagle on Sunday, and our accumulated Fuel Points allowed us to get premium unleaded gasoline for the ’70s-era price of 55.9 cents a gallon.  A complete fill-up for less than $10!  I felt like going out for a sausage pizza at Tommy’s and then taking Kish to watch the terrifying new thriller Jaws.

Who would have thought that a marketing technique like Fuel Points could make you feel like you were back in high school?

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Gasoline Prices And The Toll Road Rip-Off

I get the concept of the law of supply and demand, and I’ve always understood that gas prices may vary from region to region.  Having just returned from a long (and very enjoyable) driving trip, I’ve seen first hand the divergence in price — and it sucks.

IMG_2818The photo next to this paragraph, of a gas pump at a stop along I-90 in western New York, was taken on August 9.  Premium, which is what my car requires, was selling for a very hefty $4.16 per gallon.  At that price, it costs more than $60 to fill my tank.

The photo at the bottom of this post was taken today, August 10, at a stop in Ohio just west of the Pennsylvania border.  That was my very next fill-up, and premium was selling for a more modest $3.52 a gallon.  That’s one day later, two states over, about 300 or so miles west — and a difference of 54 cents a gallon.  When you’re filling up a 15-gallon tank, that variance quickly adds up to real money.

IMG_2859Why the enormous difference?  There’s probably many reasons, but one seems obvious.  The New York fill-up was at a “service area” stop along a toll road.  Infuriatingly, I-90, a major east-west highway, suddenly becomes a toll road when it enters greed-addled New York.  Of course, there’s no competition at a “service area” stop on a toll road.  There’s only one gas option, and you either pay what the station owner charges, or you don’t get get gas.  Inevitably, prices will be higher.  No doubt the proprietor pays the New York State Thruway Association a handsome fee for the privilege of gouging customers who either gas up at a rest stop on the road or have to endure the hassle of exiting the toll road, waiting in line to pay at undermanned toll booths, paying the toll, gassing up, and then going through the whole rigamarole to get back on the road again. In effect, the higher than normal gas prices are a kind of second toll.

Once I got off the toll road and back onto a freeway, without access restrictions, gasoline prices seemed to plummet — and by the time I got back to the Buckeye State, they were much lower.  Is it any wonder that many people consider toll roads a colossal rip-off?

The Stubborn Problem Of Consumer Confidence

The Conference Board Consumer Confidence Index fell in May to a recent low, causing some to fear that we may be on the cusp of the dreaded “double-dip” or “W” recession.  Economists expressed surprise at the news.

The only thing surprising about this news item is that some economists are still expressing surprise that American consumers aren’t more bullish about things.  Seriously, what world do these guys live in?  Leaving apart the weird notion that you can gauge something intangible like “confidence” with anything approaching scientific accuracy, what has happened recently that would encourage anyone to feel more upbeat about the economy?

For those who live in ivory towers or in the canyons of Wall Street, here is what those of us out in the country are seeing.  We know people who are out of work and have been out of work for a very long time.  We know college graduates who have gotten their degrees from fine institutions and can’t find even an entry-level job.  We know that gas and food prices have gone up since last year.  We’ve watched businesses close.  We’ve seen houses in the area sold at foreclosure and other houses in the neighborhood that seem to have been on the market forever.

So don’t tell us that some arcane leading economic indicator should cause us all to be doing handsprings.  We’ll believe the economy is getting better when our nephew can find a job and the house down the block gets sold.  Until then, understand that we are going to be cautious, and careful — and don’t be “surprised” that we are staying that way.

RVs On The Blocks (And In The Voting Booths)

In About Schmidt, Jack Nicholson memorably plays a retired mid-level executive who, after his wife’s unexpected death, takes an RV on the road and experiences various adventures — including a hot tub encounter with Kathy Bates.

I thought of the Schmidt character, and the many retirees who are part of the American RV community, when I went to fill the tank this morning and saw that gas prices were above $4 a gallon.  Even filling up my Acura cost just shy of $60.  How much would it cost to top off one of those enormous houses on wheels?  What kind of mileage do those behemoths get?  And if you were a senior living on a fixed income who hoped to spend your retirement touring the countryside and hanging out at KOAs and Good Sam campsites across the fruited plain, how would you feel about the rising gas prices that are making your retirement dreams so much more difficult to afford?

Of course, summer is the peak RV driving season.  Only time will tell how many RVs will be on the road this summer, and how many will be on blocks because of gas prices.  My guess is that any disappointed seniors who are foregoing their tours of America’s highways and byways due to rising gas prices aren’t going to be happy about it — and they are probably pretty likely to vote, too.

Calling To Report On That GM Investment

“Mr. Webner, this is one of your securities analysts over at the Treasury Department calling to discuss the status of your investments.”

I beg your pardon?

“Yes, this is one of your analysts over at Treasury.  You’ll recall that we decided to invest $50 billion in tax dollars from you and other taxpayers in General Motors.”

Who is this, really?

“It’s the Treasury Department, Mr. Webner.  Don’t make me read your Social Security number over the phone.  I’m calling you today to report on the GM investment.  You see, we’ve decided to sell our holdings of GM stock this summer.”

Okay . . . so, how did the investment do?

“Mr. Webner, I’m very pleased to report that, if we sell at current prices, we’re likely to lose only about $11 billion.”

Wait a minute — did you say we are going to lose 11 billion dollars?!?

“Yes, that’s right.  It means we’ve only lost a bit over 20 percent of the investment!  Of course, prudence compels me to point out that the loss could be greater if the share prices fall.”

How is the stock doing, then?

“I’m sorry to say the current stock price has fallen to below the initial public offering price.”

Why?

“Well, Mr. Webner, have you been to the gas station lately?  With gas prices increasing every day, consumers surprisingly aren’t motivated to buy those huge GM pickup trucks.  And during the first part of this year, GM had to offer big sales incentives and rebates to get people to buy those quality cars that your tax dollars helped to manufacture.  Oh, and there’s been some management turnover, too.  Of course, gas prices could go down before summer, Mr. Webner.  And those Chevy Volts could start flying off the showroom floors.”

So, you are telling me that we are likely to lose even more than $11 billion unless gas prices go down and the Chevy Volt takes the country by storm?

“That’s about it, Mr. Webner.  Now, can I talk to you about our planned investments in green technology companies?”

Click.


Gas, In The Heartland

Today I was on the road.  I had to gas up, and the station where I stopped was selling regular unleaded for $3.85 and premium unleaded for $4.15 a gallon.  Filling up cost me almost $60.  Ouch!  And I drive a pretty fuel-efficient sedan, not a truck, or van, or SUV.  In short, we are well past the fifty-buck fill-up and are rapidly moving into uncharted territory.  I don’t even want to think about what gas prices will be when the typically heavy driving summer months arrive.

I don’t sense that gas prices are really on the radar screen in Washington, D.C., and I find myself wondering whether that seeming lack of interest has a geographic basis.  Most East Coast cities have established, easily accessible, and often subsidized mass transit systems; they also have other qualities that discourage car use — like limited, hyper-expensive parking and constant gridlock.  As a result, Eastern city-dwellers don’t drive much.  When Kish and I lived in D.C. in the ’80s, we never drove anywhere.  It was too easy to take the Metro, or walk.  We could go weeks without filling up our one car.  As a result, gas prices didn’t make much of an impression on us.

In the Midwest, it’s different.  Outside of Chicago, few cities have any kind of meaningful mass transit.  A few green, economy-minded folks — like my friend The Conservative — take the bus, but most people don’t see that as a viable alternative.  (And I doubt that even the most green D.C. policymakers would take a city bus, either, if the Metro weren’t around.)  In the Midwest, the car is the primary mode of transportation, and because the cities are spread out, people tend to drive farther and need to fill up more frequently.  If you are someone who lives in one of the outer suburbs, or commutes from a neighboring town like Springfield, the impact of steadily increasing fuel prices is even more profound.

I think there is a reasonable chance that many bureaucrats and politicians simply don’t comprehend the true effect of $4 a gallon gas on those of us who live in the heartland.  They see gas prices as a kind of manipulable commodity that can be hiked up to encourage stubborn people to use mass transit or buy a new, more fuel-efficient car.  But in the depressed Midwest, often those aren’t realistic options.  We have to drive our current cars to get to work, and higher gas prices inflict real economic pain.  And, incidentally, when gas prices increase we need to cut our spending somewhere else — so if gas prices stay high, or get even higher, don’t look to us to engage in the kind of consumer spending that some are hoping will pull the economy out of the lingering recession.

The Fifty-Buck Fill-Up

Don’t look now, but gas prices in Ohio are spiking.  The cost for a gallon of unleaded regular has increased by more than 60 cents a gallon over the last three months.  This morning, with the gas gauge firmly on E, I stopped at the neighborhood Duke station for a fill-up.  To my chagrin, it cost $50.24 to top off the tank — and I had experienced the dreaded fifty-buck fill-up.

Gas prices are notoriously volatile.  Nevertheless, experts expect the prices to continue to rise, and rapidly.  The fact that prices are going through the roof during the dead of winter, traditionally a slow time for driving, is not a good sign.  The predictions are for $4 a gallon prices by spring, and even higher prices by the summer driving season.

The last thing our battered economy needs right now is a gasoline price spike.  People don’t budget for it, and if you are a commuter, as many Americans are, it is a cost you can’t avoid.  The money that consumers use to pay for most costly gasoline will not be spent on other goods and services and therefore won’t be used to create new jobs.  And the rising fuel costs will necessarily result in higher costs for goods delivered by truck — a category that includes everything from food to electronics — which means we may see an inflationary ripple effect in prices for a broad range of products.  This is not good news for an economy still trying to recover from a recession, or for a worker who took a faraway job because he needed to do so to feed his family.