A Gallon of Latte?
Question: Dave reads an article about how upset people are about rising gas prices. A humble algebra teacher from Michigan sends an email about the price of latte!
Email from Listener: Dave I often give my math students this calculation to figure out. A typical latte costs $3.59 for 16 oz...that's .22 cents per ounce or $28.72 a gallon! Ask your listeners if they've drank a gallon of latte lately!
those are the dumbest comparisons I have ever heard of. First off, not everyone drinks lattes but for those
that do - did the cost of a latte begin at .99 cents and increase to $3.75 in a few short years? NO it
didn't. However, thanks to this out of control gas prices the cost of the latte and EVERY THING ELSE we
would purchase has increased more than if it were part of normal inflation.
How many of us know someone who buys, fastfood, cigarets, gambling, etc, then complains about the price of gas.
If you can't afford gas and you TRULY live on beans and rice. Then I'm sorry. But most of you get worked up on
gas prices, and never think about the money you waste buying all the things you don't need.
And home prices are finally returning to sane levels after the ridiculous bubble.
I prefer to use this percentage measure as it should eliminate inflation from the scenario - it also reminds me to be kind and generous when I encounter people working in jobs where they probably only earn minimum wage.
comsumer in oil based products. They will be the ones who the oil rich countries listen to. The other componet in gas price
is the strength of the dollar .... and it's very weak due to the amount of debt the average Americam has. Perhaps is we
all get our 'lives' back by eliminating our debt, gas prices will drop in this country.
To help with your gas budget on those long trips, plan extra time and SLOW DOWN. One thing Jimmy Carter did right during the gas shortage of the 70's was to set the national speed limit to 55mph.
I've heard this before and I thought it was crazy. "No way" I thought. So, I did it myself. I drove our Suburban around town and on the highway for 30 days carefully checking the gas mileage. During those 30 days, we averaged 14.5mpg. The next 30 days, I did the same thing, but lowered my highway speed from 70mph to 60mph. During those 30 days, I averaged 16.78mpg. I just took a 300 mile trip and drove 60mph the entire way. We averaged 18mpg on that trip. That's an increase of over 20% from our "normal" driving habits.
So, if you have time, spend it in the car, driving slower.
1997 Cherokee because the Suburban has lock
out hubs. Our main transportation is a 1991
Ford Festiva. The others stay parked until we
need them.
I have another way. Over 30% of the price of gasoline is taxes. Yes the politicians are taking their cut. Recently Exxon Mobile reported a quarterly profit of $8.9 billion. The media and politicians howled about "Obcene Oil Company Profits". In that same quarter Exxon Mobile paid over $29 billion in taxes. That is before the pump taxes. We pay another 10% to 20% at the pump in most areas.
If profits are causing the high cost of gas then taxes are causing 3 times as much increase in the cost.
You want cheaper gas? Tell the politicans to drop the taxes.
The majority of Americans have spent their paycheck's on payments of things that they "had to have" and only allocated a small percentage for food/gasoline. So when prices increase, people are so quick to blame the increased prices that they can't make it, when in actuality it's people's lifestyles. Too many people look at Monthly outcome versus income and say well I have an extra $600 a month, that means I can afford a brand new boat for only $200 a month. It's ridiculous people!
Get out of debt and you will no longer be a slave!
You can do something about gas prices: carpool with fellow coworkers that live in your same town, 2 car families go down to one, use the park and ride bus system, and get a job closer to home.
Economics 101: The Price of Gas
Daily Article | Posted on 4/22/2008 by Sterling T. Terrell
Gas prices are up and oil executives are once again testifying before Congress. Clearly, many politicians, pundits, and consumers lament the rising cost of gas. Before we join them in their chorus, let us take a step back and ask this question: Are gas prices really all that high?
A change in price can be a result of inflation, taxes, changes in supply and demand, or any combination of the three.
First, we need to take into account inflation. The result of the Federal Reserve printing too much money is a loss of purchasing power of the dollar: something that cost $1.00 in 1950 would cost about $8.78 today. As for gas prices, in 1950 the price of gas was approximately 30 cents per gallon. Adjusted for inflation, a gallon of gas today should cost right at $2.64, assuming taxes are the same.
But taxes have not stayed the same. The tax per gallon of gas in 1950 was roughly 1.5% of the price. Today, federal, state, and local taxes account for approximately 20% of gas's posted price. Taking inflation and the increase in taxes into account (assuming no change in supply or demand) the same gallon of gas that cost 30 cents in 1950 should today cost about $3.13.
Neither have supply or demand remained constant. The world economy is growing. China and India are obvious examples. At the same time, Americans continue to love driving SUVs and trucks. As for supply, we are prohibited (whatever the reasons may be) from using many of the known oil reserves in our own country. Furthermore, due to government regulation, the last oil refinery built in the United States was completed in 1976. In addition, the Middle East is politically unstable which leads to a risk premium on the world's major source of oil. It is obvious that the demand for oil has grown while supplies have been restricted.
The average price of gas in the United States today is approximately $3.25. The question is, why are gas prices not higher than they are?
Blaming greedy oil companies on the rising price of gas is simply irresponsible. The profit margins of a few selected industries are as follows:
Periodical Publishing 24.9%
Shipping 18.8%
Application Software 22.5%
Tobacco 19%
Water Utilities 10.2%
Major Integrated Oil and Gas 9.5%
Hospitals 1.4%
Drugstores 2.8%
The water utility industry has higher profit margins than major oil and gas firms! Why isn't every CEO with profit margins above that of the oil companies made to testify before Congress for "price gouging"? Clearly, greedy corporate profits are not the issue.
Again, while just over nine percent of the price of a gallon of gas goes to oil company profits, approximately twenty percent of the price of a gallon of gas is composed of federal, state, and local taxes.
Those who want the government to step in and do something about the high price of gas are either forgetful of recent history or too young to remember the oil crisis of 1979. During that time, restrictions on the price of gasoline led to the inability of some to find gas at all. Price ceilings always lead to shortages. The only thing worse than having to pay "too much" for gas is not being able to find gas at any price.
Let us not be swayed by politicians out for power or by reporters out to create news where none exists. Facts and economic logic should prevail rather than rhetoric.
I remember last summer we went to a new location. We got there late and it was pitch black, it was ultimately amazing how close we were to the stars. I felt I could reach out and touch each one. It's breathtaking and God made it for our pleasure.
I'm 53, I work 2 jobs and my husband drives a gas/diesel tanker...things have slowed down considerable for him, but we can alway look ahead to next weekend and seeing the stars or having a humming bird fly so close to your face that you have to look cross-eyed to see it. Our hard work pays off on those weekends, no matter how much we have to pay for gas.
One of these days, I'm going to wake up an extra 15 minutes early, and drive at a "normal" speed of 60 mph to see how long my gas lasts.
Luckily, I don't drink coffee of any kind, although if I did it would be the kind I made at home.
> having no car, and having to wait for a bus or a friend to
> get us to the emergency room!
Nikki,
What do you think people did before cars?
How about a cab for the trip to an acute care center (not an ER)?
The money saved by not going to the hospital would more than cover the cost of the cab.
And, if you were putting that car payment into savings, you'd have money for a cab when you needed one. Use the bus, bicycle, scooter, moped or walk most of the time.
Marion,
I like the percentage of hourly pay comparison. But, minimum wage is the wrong thing to use. look at the median wage (median and the mean so very high and very low pay doesn't skew the results).
I'd also suggest factoring the mileage increases in vehicles. My favorite stat is the median hours of work to travel 1000 miles in the median mileage vehicle.
Are you suggesting that the companies not sell at market rates?
price controls demand, and we don't have the supply to handle much more demand. We import a lot of refined oil products not just oil because we cannot refine as much as we use. The exporters are not going to sell to us at $2/gal if China will pay $4, so we'll be limited to what we supply ourselves.
Price controls caused shortages and rationing in the 70s. You want that again? You can have 10 gallons a week for $3/gal. If you need more, you might be able to buy a few gallons from your neighbor who only used 5/gal last week. Sound good to you?
Saving on transportation costs is only part of the answer.
Going slower, avoiding jack-rabbit starts, car-pooling, and seeking alternative transportation are all good ways to lower
your transportation costs.
Taking a long hard look at where you spend your other money is, in the long run, more important.
Rice and beans every day, as the man from the Dominican Republic said, is something to give thanks for!
How much sugar water do you drink at over $6 a gallon (single serving size soft drinks and fruit flavored beverages); coffee (mentioned before); Do you replace your shoes because they are a little scuffed; does your son really NEED those wheels in his heels; does your daughter really NEED that new dress, purse, hairdo, cell phone; will the family REALLY suffer if you have meatless meals three or four days of the week; even the whole week; and what about those cute electronic toys that someone just CANNOT LIVE WITHOUT? I have covered about half of the cuts that many of us could make in our spending.[[Notice I didn't say budget]],
I remember when we were too poor to pay a tithe (couldn't afford it), but one day we decided to pay it anyway, and now our budget is so well under control that I don't have any trouble adjusting to the increase in gasoline prices. It would have to go to about $20 gallon before it would be
a strain.
corrie
prices at several stations went from $3.49
on Monday, to $3.59 on Tuesday, then back to
$3.49 Wednesday afternoon. The next Saturday
it jumped to $3.69. It seems like the owners
are listening to the stock market and PRICE
GOUGHING like they did during the hurricanes.
The price of the barrel of oil takes several
days or weeks to affect the price of gas that
station owners paid for what they have in the
ground under their asphalt. They didn't pay
more for that gas that's been in there for
several weeks, but they are GOUGHING consumers
and upping their profits on tomorrows price of
barrel of oil. Their is no shortage of gas,
just cheaper gas.
a correction to the seeming unexplainable price hikes.
Point to consider: If a gas station purchases 5000 gallons of fuel at X dollars and will not require
replenishment for weeks, why would the per gallon price go up over night when the price of crude jumps?
Seems to me that the fuel has been purchased already at the current market rate, price increases should
not occur until the next fuel supply is purchased.
I am absolutely for public transportation and will gladly park my vehicle in favor of riding
bus, train or whatever mass transit is available.
Texas seems to be a state (wonder if being the energy capital has anything to do with it???)
resistance to mass transit in the form of light or heavy rail. Metro provides bus service at an ever
increasing cost and also is limited to a perimeter around Houston (I know because I drive and ride daily).
Other countries pay outrageous costs for fuel, especially a per liter price but they also enjoy some of
the most economical vehicles in the world. Some of the vehicles are produced by two of the
big three auto makers in the US. These cars are not available in the States for some reason.
Granted every budget has an areas that can be shave. Budgets can be compared to pizza: keep taking away
ingredients and soon there is only crust. I have acquired a task for dough!
neck and neck. Gas here in Georgia is $3.89/
gallon and milk is $4.09 a gallon. Hmm something
is not right here.
S is not many would purchase them. Until gas
prices hit most in the wallet they will drive
large inefficiant cars
I think first maybe we should all take a vacation. Yes, a vacation. I am not however talking about one to the Bahamas’ or a cruise or
Disney World. No we all need to take a vacation to a developing country? Have you been there? Have you seen the kids who walk over dirt
and landfills without shoes. Have you visited a family with six kids that live under one cardboard house that doesn't protect against wind dirt and cold. Have you visited the neighborhoods where a loaf bread is a blessing? Have you been to a place the adults in in the family will walk
4-5 miles to get to a public bus so they can go work in a factory making $3.00 a day so you can have a remote for your TV that you will pay
$10.00 for. Have you been there?
I thought when I was young that my parents were poor. I tease them saying all they fed us was rice and beans growing up (it's not true we
always had a freezer full of meat from grandpa's farm). My sisters, brother and I didn't have lots of trips to Disney world or fancy toys to play
with. We had family, we had a financially stable family. Non of us would trade that for all the trips or toys we could have had. We have memories
Allow me to share one. My dad would ride his bike to work everyday in the summer(now he rides it as long as it isn't snowing) He would
write on the calendar everyday he rode his bike and would then calculate how much he saved in a month. This was back when gas was less
than $1.00/g. He also ate peanut butter sandwiches everyday. I calculated how much money he probably saved doing that one day. It was
like $15,000 over 20 years. Folks we need to take a serious look at our needs and wants. We have a lot more wants that we think are needs
than we would care to admit.
Let me also tell you what has happened to my husband and I in the past few month. In January my husband lost his job. This should have been
a difficult thing for us. However, we had worked hard the last year to pay off almost all our debt. We were actually talking about living
off the income I make as a nurse. We live off the income I make as a nurse now. In March our dryer died. We bought a new front loading washer
and dryer with cash. The next month my CD player died. We bought a new expensive CD player with cash (yes a want). Then the next month our
TV broke. We bought a new flat screen TV (not big but nice) with cash. I was calculating all our expenses yesterday morning and thinking
how glad I was we were prepared for my husband to loose his job and we were still able to pay cash for many wanted things. My husband and
I will be revisiting our budget again before June as we are both going to go back to school and I will be working part time. We will have
money budgeted for the increase in gas prices, but maybe we will also pull out our bikes and get some much needed exercise.
How thankful I am that my parents have modeled a frugal life for us kids. How thankful I am that we didn't vacation at resorts, but rather
visited and made friends in developing countries. Beans and rice can truly be a blessing. Make some tough changes today so you can bless you children in the future. Their character is more important than the coolest new toys and resort trips. Maybe they will remember the times
when the family road their bikes to the grocery store and they will be blessed.
Hooper, an old cowboy, told me when he first bought gasoline (in the 30's) he was paying close to a dollar a gallon for it. (He lived in a remote area.) He was working for about 2$ a day. How's that for perspective! Paid $40 or more a gallon lately?
In years past, people did not just jump into the car to run to the store for sundries. They made lists and did their weekly shopping, often traveling by city bus. There was not a vehicle parked in the driveway for every member of the family. Alternate means of transportation were arranged for all but the main breadwinner.
GM did not do the US any favors when its executives convinced Congress that what was good for GM was good for the US. The highway system that was created simply put mass transportation out of business. In most of the US it is not convenient to travel by train as it is in many other countries. Whereas most freight was hauled by train and picked up by "transfer trucks" at local destinations, now we all vie with huge trucks for space on the roads.
What is not good about the teacher's example is the grammar: "have drank" drink drank drunk
pounds. Not a win/win deal.
Go to Starbucks and by a pound of very good coffee. Then make it at home. It will be less expensive and you will not be disappointed. If you drink five gallons in a week, that is excessive, so how did the math teacher deal with this? It will be a good day in the Union when we drink more coffee that we waste oil.
comment befoer postnig!
trips, groceries, errands, etc...Cooking : when using oven, try to cook more than one meal at the same time...just heat it later in microwave..Flourescent bul
light bulbs..Slowing down your speed ...it works...after Katrina hit, on the way back home I set my cruise control 55mph. People passed me zooming but a good
50 miles ahead I was passing them as they were filling their gas tanks with gas from a can..I already knew there was going to be a shortage due to Katrina. I
live in the country, no public transportation...but I don't have to put up with people who hasn't paid a taxie lately, which costs more than a car pmt, esp.
when you have children..Try taking a taxie when you need evacuate for HURRICANES!!!! HORSES ARE NOT CHEAP EITHER, IT COSTS US $170 PER MONTH TO FEED 3 HORSES
COFFEE, NOBODY'S COFFEE IS AS GOOD AS WHAT I MAKE AT HOME, WHEN I GET WEAK AN BUY COFFEE "lATTE" I AM ALWAYS DISSAPPOINTED...NEVER AS GOOD AS MINE...WE ALL
CAN ONLY DO WHAT IS POSSIBLE FOR OURSELVES TO SURVIVE..GOD BLESS
The moment I have to start worrying about buying 30 gallons of latte coffee, I'll make note of this blog.
In the end, it's not the cost per gallon of things that bother me. It's the amount of $$ I have to dish out of my wallet. And 5-10 bucks a month (coffee) compared to well over a hundred per month (gas) is the problem.
Serna, A resort I visited some years ago kept its coffee hot by using what was essential a great big Thermos that was shaped like a pitcher. It had a lid on it, too. It was made just for coffee and hot beverages. They didn't need to use any electricity and it kept the coffee warm for hours. I Surely this will be cheapter than $70!