KBB: Motorists Have Finite Money

Justin Berkowitz
by Justin Berkowitz
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kbb motorists have finite money

Like many organizations in these gas-conscious times, Kelley Blue Book (KBB) and the LA Times (LAT) are fascinated by the negative effects of high gas prices on consumer spending. So KBB did a study and the LAT reported it. The two giants in intellectual research found that, in short, $4 to $5 gas has forced people to spend less money on other shit [paraphrasing]. For example, people aren't going to the movies as much, now that they are spending more on gas. [Do you know what a movie theater looks like? Click over to the LA Times, and you can not only read "less money on movies" but see a picture of a real line at a real American movie theater.] Other things people aren't buying as much of: expensive coffee, vacations, clothing, restaurants, carwashes, DVDs and high-quality marijuana. OK, I added that last one. But how do we know that the rising costs of other consumables– most notably food– don't account for the cutbacks?

Justin Berkowitz
Justin Berkowitz

Immensely bored law student. I've also got 3 dogs.

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4 of 12 comments
  • Psarhjinian Psarhjinian on Jul 01, 2008

    Buy less expensive coffee? Over my decaying corpse...

  • Anonymous Anonymous on Jul 01, 2008

    I spend less on coffee only because both of the coffee places that I like went out of business; so, now I brew my own (I'm an engineer, we run on coffee). I have significantly cut back on driving and kept my fuel bill at about $25 per week versus the $20 per week I was paying four years ago. My food expenses have certainly gone up, but that could also be due to changes in the type of food I buy due to my increasing income over the past four years. My entertainment expenses have risen greatly as well.

  • SunnyvaleCA SunnyvaleCA on Jul 01, 2008

    There's also the reverse wealth effect of declining real estate. Losing $35k in home value in a single year can sure make you feel poor even if you gained equity for the previous 5 years. Some of the activities listed in the LAT article seem like frivolous luxuries (coffee, movies, dining out, baseball games). Perhaps the current amount of those activities is appropriate long-term and that the previous amount of those activities was excessive and based on spending beyond one's means. As for food, I can see an obvious rise in prices. However, I assume that most of the additional costs in food are due to energy costs not biofules diversion. The Biofuels Digest notes that the corn portion of a box of corn flakes is 2.2 cents, so even a 10x increase in corn prices would have little effect on a $4 box of cereal. http://www.biofuelsdigest.com/blog2/2007/08/27/cost-of-corn-in-a-box-of-corn-flakes-22-cents-why-are-corn-prices-being-blamed-for-food-price-increases/

  • Bomber991 Bomber991 on Jul 02, 2008

    I wonder what Kevin's explanation is for his pay increase to make gas cost less? Maybe he lives closer to work, maybe he drives a more fuel efficient car, maybe he graduated from college?