Rising Gas Prices Don't Hurt Like They Used To
A Commentary by Froma Harrop
Here's why I'm not panicked about rising gasoline prices, as many headlines suggest we all should be. It's a personal story. Let me start at the beginning.
The automotive love of my life was my first. It was a 1979 Pontiac Grand Prix, already 10 years old when it drove to my door on that mild spring day. A cloudy ocean color, the mid-size car had a V6 engine, and boy, did it move. A whole lot of hood stood between me and the car ahead.
But ask about its fuel economy, and "economy" is not quite the word. It got about 17 miles per gallon. To obtain such low mileage today, you'd have to drive a giant Chevy Suburban SUV -- which actually says a lot about how much more fuel efficient Detroit has become.
I currently drive a 10-year-old Honda Accord, four cylinders, manual transmission. His zippy motor runs 25 miles to the gallon. So let's calculate what the gas price meant to me then and means now.
In 1989, a gallon of gas cost about $1.12. Driving 10,000 miles in the Pontiac would cost me $1,205 in today's inflation-adjusted dollars. Going the same distance in the Honda at the recent "high" price of $3.75 a gallon costs $1,500. That's about $300 more -- not an insignificant sum, but not bankrupting, either.
Let's move on. The car I yearn to own is a new Ford Fusion Hybrid, which gets 39 miles to the gallon. I could go 10,000 miles in that for $960. Thus, driving the modern fuel-efficient car would cost me $245 less than the beloved Pontiac, even at the much higher 2012 price of gas. (Yes, you pay more for the high-tech car. I get that.)
The point is that as Americans find ways to burn less energy in their cars and in their homes, price increases don't hurt as much as before. That is why the prospect of higher gas prices this summer does not have Americans grabbing their children and screaming for deliverance from the Oval Office. They have become a bit less sensitive to energy costs.
They are also somewhat more sophisticated about the reasons gas prices rise and the reality that they often fall. In a recent Washington Post/Pew Research poll, fewer than one in five blamed the president for higher gas prices. A slightly larger number, nearly one in four, said they did not know whom or what to blame.
May we suggest market forces? Demand from China and India continues to rise. The American economy is improving, and driving increases as the weather up north begins to turn warm.
Climbing tensions with Iran has also spiked energy costs. If things turn violent, analysts see the price of gas going up another 50 cents, to possibly $5 a gallon come summer. Today's price already reflects much of that uncertainty, so if the tensions ease, the price could go down.
Higher gas prices are worrisome for the larger and still weak economy. They eat into paychecks that could be cashed for other things. It is said that a one-cent rise in the price of a gallon of gas absorbs about $1 billion in consumer spending over a year. The broader economy is one thing that Americans, rightly or wrongly, tend to blame or thank the president for.
Today's cars are not only more fuel efficient, they're safer than the models of 30-odd years ago. What they lack is personality, but that's another story. Who knows. Someone may revive the '79 Grand Prix with a hybrid-engine heart. Otherwise, as so much else in life, there's no going back.
COPYRIGHT 2012 THE PROVIDENCE JOURNAL CO.
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