Tuesday, January 10, 2012

How much can you afford to pay at the pump?

Gas pump with money spilling out

As Americans, we're already quite accustomed to rising gasoline prices. Most of us paid $3.07 a gallon on average last year, and the current national average for January 10th is sitting at around $3.34 a gallon. Now, senior petroleum analyst Gregg Laskoski at GasBuddy.com is predicting that prices for 2012 will hit their highest levels yet. "Looking at the average prices that have closed each year for the last seven years, the average movement from that price to the peak price in the next 12 months has been 93 cents a gallon."

Using Gregg's calculations, that puts us with the potential of paying over $4 per gallon at the pump during the spring and summer months this year when fuel prices tend to spike. Rising demand for oil in China, India, and the U.S. is to blame for the price hikes, and the fact that the U.S. exported more oil than it imported in 2011, artificially increasing the price.

To reflect this, TIME magazine recently released a statistic estimating that we spent about $4,155 last year to put fuel into our vehicles. It's amazing how that $40 - $80 a week can add up so quickly! Using the median household income of around $49,445, the price of gas eats up 8.1% of a family's total earnings each year.

Many Americans have chosen to carpool, or switch to a fuel efficient vehicle such as a Toyota Prius as their primary means of transportation in order to cut down on their fuel consumption (save that 10 MPG truck or hot rod for the weekend!) In an interesting turn of events, some teenagers have even delayed getting their driver's license because of the rising costs. According a study by the Detroit News, in 1983, 69% of all 17-year-olds had driver’s licenses. Compare that to 2008, when only half of 17-year-olds had licenses.

The question that then must be asked is, at what price point does gasoline begin to alter your lifestyle in a way that requires you to make changes? Do you take gasoline for granted or does the price of fuel directly affect how you budget things on a weekly or monthly basis?

For me personally, I hate spending more than $30 at a time if I buy gas. I don't know why, but going beyond that magic number makes me feel like I'm stretching my wallet incredibly thin, or if I find myself having to gas up more than once every 7 days.
What is your magic number? Leave a comment or tweet your response to @LouFuszToyota !

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