This week’s sign the apocalypse is firmly set upon us was the story of rising gas prices, the one and only story seemingly capable of getting our focus off of the New York Knicks’ Jeremy Lin. Reading the papers (remember them?) and watching news programming, you would have thought that the very essence of American life was being forcibly pried from our hands, sealed and locked in a steel oil barrel, and dumped deep in the Pacific with all the other toxic unmentionables.
My favorite stories were the “searches” of the local news crews, where they drove around town looking for the least expensive places to buy gas. Come on, is the suggestion really there that I should drive out of my way to save a few pennies on the gallon when filling my tank? Seriously?
When gas prices rise by a few pennies, we seem to lose all rational thought. If prices increase by a dollar, forget thought at all, much less rational thought. It’s all base instinct and outrage.
Take a deep breath and let that mull in the back of your mind for a minute - a dollar.
Reminds me of my parents a decade ago, who drove from Kansas to visit my sister in Boston. Their plans were to drive back via Canada, a place they had always wanted to see, but had never found the occasion. Fuel prices increased in the weeks preceding the holiday, leading them to cancel the Canadian portion of their trip and returning home the most direct – and inexpensive – route. To this day, they still haven’t seen Canada, and while hardly a huge loss (c’mon, it’s Canada, for chrissakes), for what, savings of $70?
I’ve spent more than $70 dollars this month on wine alone, and keep in mind February is a short month and I buy very cheap wine.
How many people change vacation plans over $70? Probably not many, and I’m certain my parents, in a form of rather selective memory, would say they wouldn’t either. Ah, but mask the inquiry in another question – How many people have knee-jerk reactions to rising gas prices? Answer: apparently everyone.
Do you think our gasoline prices are high? It’s a question that’s worth exploring relative to gasoline prices around the world. Are you ready for this? Sit down. Prices for gasoline in Europe are about double that of the United States.
Gasoline usage in this country is ridiculous, and probably based in our collective culture. The latest statistics available are from 2005, but they are staggering – Americans are the world’s largest consumer of gasoline and burn an average of 386 million US gallons (1.46 gigalitres for you metric-obsessed) of gasoline each day.
Sometimes, numbers are so big it’s best to draw comparisons through an illustrative metaphor. Take each of those 386 million US gallons used daily and put them into 55 gallon oil barrels. If you stack each of those over 7 million barrels end-to-end, you will roughly have the height of our indignant outrage over fuel prices.
Americans love their space. That’s why our ancestors moved here and stole all this land. Land represents liberty, at least our liberty, and freedom is represented by our ability to travel the land. In the “old days,” that was by horse, and it was taken so seriously that the penalty for horse theft was … death. Yes, stealing a horse was dealt with more severely than sometimes killing a human. The equivalent today would be the death penalty for grand theft auto. Now, we wouldn’t do that, would we?
No, of course not – car theft penalties in California (where we love our cars) for first time offenders are one to four years imprisonment and a fine. However, relative analysis is always important. Would it surprise you that the penalty for felony car theft is more stringent than felony domestic abuse (three months to three years imprisonment)? Yes, you just might serve more time for stealing a $950 car than for beating your spouse.
I won’t go so far as to say we Americans love our cars more than our spouses, but the raw data could, possibly, lead an objective mind toward some rather troublesome hypotheses.
Okay, back to that dollar from above. Remember that solitary dollar? Let’s assume the worse of the predictions for the summer come true and gas prices increase about 25%, or a dollar a gallon. Filling your 15 gallon tank every two weeks means another $15 every two weeks, or a whole $390 a year.
Is it okay to take the suicide watch off yet? Can we turn some collective attention to anything more pressing?
I know! How about attention to saving fuel and money? Maybe there’s even a way to save so much we actually make money?
Redirect public outcry and make decisions to cut driving by 10 to 25%. At the low end, you’ll incur less of an increase in your total costs. At the high end, you won’t incur any additional costs at all. Moreover, you’ll save maintenance costs for your automobile, including longer periods between oil and filter changes in the short-term, and longer periods between purchasing tires over the long-term.
Cutting driving takes only a little imagination and some good old fashioned persistence. Determine if you can work from home occasionally, thereby eliminating some commuting. Group your errands into one trip from home instead of several. Trade your car trip for a bike ride or a walk whenever possible, and on those occasions you have to drive, try to walk between stops instead of moving your car from stop to stop.
Saving money from limiting your fuel consumption is one thing. How about profiting from other’s consumption of fuel? Give up the thoughts of investing in retail fuel stations, for believe it or not, they don’t make much money off selling gasoline. Their margins come through over-priced convenience items like soda and chips. Rather, you want to find a way to invest in “Big Oil.”
Oh, c’mon now, 99 percenter, get off your high horse. Big oil is not the devil and it is not evil, as selling consumers the oil they consume – what they voluntarily buy - is no more evil than NBC Universal televising brain-dead programming to consumers who want to view that. Remember, no one forces consumers to buy fuel at the pump. The very essence of business is providing value to customers, where value is defined as a simple function of delivering goods or services at a price which consumers are willing to pay. High fuel prices don’t really matter if you don’t pay them, just like the high price of a Honus Wagner baseball card doesn’t matter if you don’t buy one.
“Big Oil” might be best exemplified by Exxon Mobil (NYSE: XON). It currently trades at $87.34 a share, at the high end of its 52-week range of $67.03 to $88.13. At its current price, the dividend yield is 2.2% ($1.88 per share annual dividend divided by share price of $87.34). If you have any money in a passbook savings account or short-term CDs – any money – take a note at the dividend yield, for it is much, much higher than the interest the bank is giving you every quarter.
Americans, it’s time to stop crying and complaining, for nothing is more un-American than that. First off, know the price you pay at the pump is half of what your Italian cousin pays, and while he probably eats better than you do, also revel in the fact you don’t live in his economy or under his government. Then, with your new rational, logical and wider perspective, cut the miles you drive and take the money saved on gasoline and invest in Exxon Mobil or another large international energy (read: “oil”) conglomerate.
More importantly, get on to something more important.
Of course, it’s entirely possible I’m full of gas as it’s just this guy’s opinion.
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