The Real Cost of Gas

Gas will cost the average American 4% of their income, if $4 a gallon becomes the average price of gasoline over the next year. I have reached this conclusion by taking the average American mileage for 2006 (15,000 miles), dividing it by the average American m.p.g. car fuel economy for 2008 (30.1), multiplying that by $4 a gallon of fuel and then dividing the average American income for 2006 ($48,000). Finally, taking one and dividing it by the remainder, getting the percent. In this case it rounds to just slightly over 4%.

Of course, I am using 2006 numbers for the math. I have not found a 2007 number to go off of for income, etc. Of course, 2008 numbers have yet to be determined. However, I would argue that incomes have remained rather stagnant since 2006, and very probably have gone down for many. Of course miles driven, fuel economy, etc. can also effect the math. I'm sure because of prices the number of miles may have gone down as well. However, those are tit for tat arguments. I think 4% is a pretty good number to go off of.

Of course, I think many of my friends are paying much more than that. The gap between rich and poor has grown. The rich are getting much richer, throwing the average income up. In reality, I don't think the average income has gone up much. Or at all.

When compared to 1998 levels, the height of the Clinton economic expansion/bubble (which in all fairness it ended up being) and record low gas prices, we have seen gas eat up 2 and half times more of our earnings. In 1998 the average American spent 1.6% of their income on gas (now that's more like it). The average income was $38,000, the average fuel economy was 22.1 m.p.g., and gas cost an average of $1.03 per gallon, and they drove an average of 13,000 miles that year.

Of course if you take into account the good number of people who make less than $48,000, including many who commute from small towns, suburban areas, and the countryside to more urban, industrial areas for work the prices go up even further. For someone making $28,000 like I almost did in 2007, this adds up to 7% of their income. Insane, especially when one takes into account that is using average mileage. Many people commute twice that in a given year, especially many rural workers.

All this makes me incredibly glad that I now walk to work and have cut my fuel expenditure by half or more.

I think it's time for something new! How about you? Until then, the prices just keep going up...