In the UK over 70% of this cost is tax – the Government keeps hitting on the car owners under the ‘environmental’ banner. They have just postponed a 2p per litre increase until September as I am sure they can sense a groundswell of anger at the way the car owners are seen as an easy target.

I am sick of it to be honest – what are the alternatives when only the large cities have what could be described as a joined together public transport system (actually probably only in London and even then….).

Time to stand up and say enough is enough…..

I’m sorry, but this is just flat wrong.

Point of comparison: In January 2005, the M1 money supply (the sum total of cash, traveler’s checks and demand deposits) was $1,366.0 billion. In April 2008, that figure was $1,367.6 billion, which means that it increased by 0.12%.

So, no, you can’t claim that the Fed is pumping out cash like it’s going out of style when it went up by 1/8th of a percent over 13 quarters.

There is no data whatsoever to support this “fiat money” argument. The dollar has a floating exchange rate, so the market determines the value of the dollar.

Obviously, the market doesn’t feel so good about the US dollar at the moment. When you understand why investors have traditionally believed in the dollar and why their belief might be shaken as of late, then you’ll be closer to figuring out what’s going on here, and why the printing money has absolutely nothing to do with it. Change the policies that provoke investor pessimism, and it will become clear what needs to be done to strengthen the dollar.

As for the question: My breaking point was $3 a gallon. When it got there a while ago I started the project out in my barn to homebrew fuel. I drive Diesels so I have that option.

I still buy a few tanks of premium a year for the classic car, and since my daily driver uses fuel I make myself I don’t mind paying whatever it costs for that ride… I put less than 3,000 miles per year on the old car. But I could see parking it semi-permanently if gasoline were to go up to $10 a gallon.

–chuck
http://chuck.goolsbee.org

“A news story in the Financial Times tells us something very interesting. “The gap between input prices and what can be passed on to consumers is at its widest for 20 years.” For example, a 4-pint bottle of milk has gone up 16.5% in the United Kingdom. The price of milk from the farm has soared nearly three times as much – 45.8%. Or take bread. Wheat is up 56.9% over the last year. But a loaf of bread has only gone up only 8.5%. Crude oil is 62% more expensive today than it was a year ago. But a can of oil…or petroleum products generally, at the retail level…are up only 25.4%.

What does this mean? Probably two things. Maybe more. First, input prices have jumped so fast retail prices have not been able to keep up. It may also mean that retailers don’t think the raw output prices are permanent…or that they, the retailers, can afford to pass them along without losing customers. It may also mean that commodity or wholesale prices have gone up too far, too fast.

One thing is certain, the gap can’t last. The retailers can’t buy oil 62% higher and sell it only 25% higher – not for long. Either the price of crude comes down…or the price of retail petroleum products goes up.”

I use 1 Tank a week in a car that has a 20 gallon tank and gets roughly 22mpg combined. So for every dollar gas goes up is costs me $80 more a month. Basically I figured on gas going up $1 every year. So every year I’ll be paying (80 x 12) = $960 more than the year previously. I realize this is rough, but I figure a dollar more a year is a good average. The first few months will be tens of cents more, where the end of the year may be a dollar plus more – year on average: a buck.

If 2008 averages out to a $4 per gallon year I will have spent ($4 x 20 gallons x 52 weeks) about $4,200 on gas. (With each additional year adding about $1000 to that total.)

If a Hybrid / more economical car can get me double that mileage (44 combined) it would half my cost of gas per year. This year I would have saved (4200/2) $2100 and each year after an additional $500 on top of that.

To me, it’s not worth it (yet) to go out and spend the loot and get that fuel efficient car. When the car will pay for itself (or at least its premium) I’ll consider it. It’s getting close though and I DEFINITELY am chaining trips and cutting back on unnecessary driving.

Oh – and the motorcycle… that’ll save me about $800 a year. Driving it 3 days a week for 5 riding months. That’s NOT all from gas though. Most of it comes from the free parking.

And part of the reason the dollar is finally devaluing is that this war we’re in was ‘financed’ with tax cuts. Meaning taxes have to go way up in the future, or we need to inflate our way out of the debt incurred. Guess which one the market finally started believing in?

The catch is, the dollar is not the “sole” problem. Gasoline and diesel prices have gone up in real terms worldwide.

However, due to the US dollar being printed by the government as if it were monopoly money (in order to reduce the real value of holdings by our friends (?) in China, Japan, etc.) combined with the fact that most oil sold in the world is sold denominated in US dollars, the end result is that Americans are taking a far bigger price increase because it is our currency being devalued.

A devalued currency means it takes more money to buy anything of true value, since the number of dollars is increasing while true things of value may not be increasing at all.

In plain English, inflation of prices will (and is) resulting from this.

All of this is to hide the fact that the United States is essentially bankrupt.*

But then, all other nations in the world also using fiat currencies (based on “promises, promises” instead of the value of gold or silver in a safe, fully backing the currency) are on the same boat, and it’s sinking fast world-wide.

* printing-press economies can be summed up by an example from 85 years ago and currently. Look up “hyperinflation” and “weimar republic” for 1923 and “zimbabwe” now.

German survivors of the Weimar Republic’s hyperinflation of 1923-1924 recall that after a short while, hausfraus were going to get husband’s wages twice a day in wheelbarrows – literally stacked with money – and spending it straight away as prices went up by the hour. Literally.

By 1924, it was so bad that no amount of money was enough to buy food which was no longer on store shelves. Kind of like zimbabwe now.

When how come gas has also gone up in other countries?

As for my breaking point, we’ve already modified our driving habits. I’m only going into the office a few days a week, but I’m not sure how much more face time I can afford to lose with my colleagues.

My 11-year-old car takes premium, so maybe I’ll swap with the spouse. I have no idea how public transportation would work from here (we’re in a subdivision, but not that far out, so I’m sure it exists). I’ve never ridden a motorcycle but I’m looking into that.

That’s what I was thinking. I suspect there are a lot of people that would like to bike to work but, given current traffic congestion, it’s just too damn dangerous for most to even attempt. Maybe $12/gal gas will motivate local govts to construct more bike-safe routes.”

If I were to bike to work, it would be about 7.5 miles, at least as the crow flies, and I could do that on the city side streets. However, like you said, I don’t want to joust with cell-phone distracted SUV drivers while I’m pumping away on my fahrrader…

It’s bad enough when I’m in a 2800 pound car, it would be fatal on a bicycle.

If the fuel price keeps going up, I will be looking long and hard about getting onto the bus (as we have no light rail here) and I guess I will have to pray that I don’t get stuck at the office late a lot. I’m a supervisor and work many odd hours, so the freedom a car brings is wonderful. You really appreciate it when you may have to do without it.

Oh, BTW, $52.00 for 14 gallons last night.

The price of gas isn’t the problem :(

Wow, that is so true! Thanks for sharing that. Our worthless paper money that is so easy to print.

SWEET!!

And to think, just over a week ago I was paying $3.69/gallon for regular and on my way in to work this morning, the price has already jumped to over $4.00/gallon…for regular!!

Yup..the bicycle is definitely starting to look more attractive.

Then why isn’t oil one million dollars per barrel?

Take the current price of oil, P, and multiply by 0.0006 and you get an approximation of the fraction of US GDP spent on the stuff. Right now, P=130 -> 8%. If oil rises to $400/bbl — which is about what $12/gal would mean — we get 24%.

But like all stupid linear models in a chaotic world of incestuous interconnections, it’s likely this will never be hit, as people do what the market will tell them to do: conserve. But even if they don’t, the experience in other countries with prices currently double what the average USA is crying over demonstrate that this isn’t the end of the world.

If anything, this is a tremendous opportunity. My advice is simple:

1. If you are a doomer, put your money where you mouth is and commit suicide.

2. If you feel the price is too high, stop spending. Buy a more fuel efficient vehicle. Invest in a future that does not include ‘evil’ oil companies.

In short, get off your butt and do something. Complaints are as valuable as politicians promises.

You should see Michael Moore`s documentary `Sicko`. It shows analogy in the medical system!You can`t teach the greed to calm down. You must burn it out. We need blood, I know it is not christian, but there is no way to fight against people without morals, and abundancy of greed.

At $5-$6 a gallon, I might use my bicycle more, but most of my driving is discretionary as I work out of my house.

food prices are another issue!

If the oil producing nations go for Euros as the denomination currency the dollar will drop still further.

Good thing. Filled up for $3.93.9, and this afternoon after leaving work and on the way to pick Mrs. up, I happened to notice gas was now $4.19.9 per US gallon in northwestern Michigan.

You know, northwestern Michigan with the collapsed economy which has been in recession for years while the only other state in recession was Louisiana after Katrina.

God only knows what gas jumped up to in New York City today, or LA.

My breaking point? Not gas price, but how many colleagues can I squeeze into the Prius so they can help pay for $20 a gallon gas to & from work 15 miles away – there’s room for three more.

They might have to lose a little weight, but with food prices soon skyrocketing, I suspect this will be less of a problem than it has been since, oh, about 1933.