Monday, April 11, 2011

Got gas?

Many see the cost of petroleum as the biggest hurdle to our so called economic recovery. I certainly agree that it's a serious problem and one that will certainly hurt any recovery. The high cost of gasoline will benefit a few oil companies and their shareholders. But the rest of us are getting squeezed and any extra disposable income is going into the gas tank rather than the economy. Eating out will certainly take a hit. Restaurants will probably be one of the first to see the effect of less disposable income. We have already cut back from going out two or three times a week to just Friday nights. Both my wife and myself drive huge gas guzzling, ozone destroying SUV's and spending $90 per fill up hurts a little. Our fuel bill is now well north of $500/mo (our cars are paid off so buying a new car is not an option right now).

Anyone that does any grocery shopping knows how much food has gone up, regardless of the phony inflation numbers Washington puts out. As fuel prices go up the cost of everything we buy will continue to go up. Of course our wages will not keep up. I was fortunate this year and got a whopping 2.8% raise which after taxes increased my check about $40. Unfortunately my medical went up, my life insurance went up, the cost of fuel, food and everything else went up. I figured it all out and even with a $80/month raise it hardly offsets the fact that my fixed monthly expenses increased nearly $470. So even with a raise I am $390/mo poorer than I was last year. That's $400 a month less I have to spend on fun stuff. What's the world coming to? Am I gonna have to drink cheaper scotch, smoke cheaper cigars, play crappier golf courses.

What will the high cost of Gas do to the real estate market out here. Most of the people in the IE work a long way from home. So is buying a home in the far flung areas like Hemet or San Jacinto a feasible option with gas at $4 or $5 a gallon. It might force people to carpool but that's not an option for a lot of people. I think it will take high gas prices for a year or more before it starts to affect the prices. Most people expect the price of gas to come back down and it will take a while to change that mindset. But once it changes will there be any buyers for those distant suburbs?

1 comment:

Razor said...

You said your cars are paid off so buying a new car is not an option. Then why not sell the SUVs and buy used cars that don't use as much gas then? You should be able to sell the SUV for enough to buy a civic or camry or something? I'm confused...

Not AS confused as when I hear people say they're buying a new car BECAUSE their car is paid off. I never understood that one... and i've heard it a lot... So strange.