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Larrry

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A COUPLE GRAND a year, so hows that change workin out?


Gas tanks are draining family budgets


By JONATHAN FAHEY, AP Energy Writer Jonathan Fahey, Ap Energy Writer – Fri May 27, 6:01 pm ET
NEW YORK – There's less money this summer for hotel rooms, surfboards and bathing suits. It's all going into the gas tank.

High prices at the pump are putting a squeeze on the family budget as the traditional summer driving season begins. For every $10 the typical household earns before taxes, almost a full dollar now goes toward gas, a 40 percent bigger bite than normal.

Households spent an average of $369 on gas last month. In April 2009, they spent just $201. Families now spend more filling up than they spend on cars, clothes or recreation. Last year, they spent less on gasoline than each of those things.

Jeffrey Wayman of Cape Charles, Va., spent Friday riding his motorcycle to North Carolina's Outer Banks, a day trip with his wife. They decided to eat snacks in a gas station parking lot rather than buy lunch because rising fuel prices have eaten so much into their budget over the past year that they can't ride as frequently as they would like.

"We used to do it a lot more, but not as much now," he said. "You have to cut back when you have a $480 gas bill a month."

Alex Martinez, a senior at Arcadia High School outside Los Angeles, said his family's trips to San Francisco, which they usually take once or more a year, are on hold. As he stopped at a gas station to put $5 of fuel in his car — not much more than a gallon — he said the high prices are crimping social life for him and his friends.

"We're always worrying, `How are we going to get home. We've got less than half a gallon left,'" Martinez said. "We definitely can't go out as much, and we can't go as far."

As Memorial Day weekend opens, the nationwide average for a gallon of unleaded is $3.81. Though prices have drifted lower in recent days, analysts expect average price for 2011 to come in higher than the previous record, $3.25 in 2008. A year ago, gas cost $2.76.

The squeeze is happening at a time when most people aren't getting raises, even as the economy recovers.

"These increases are not something consumers can shrug off," says James Hamilton, an economics professor at the University of California, San Diego, who studies gas prices. "It's a key part of the family budget."

The ramifications are far-reaching for an economy still struggling to gain momentum two years into a recovery. Economists say the gas squeeze makes people feel poorer than they actually are.

They're showing it by limiting spending far beyond the gas station. Wal-Mart recently blamed high gas prices for an eighth straight quarter of lower sales in the U.S. Target said gas prices were hurting sales of clothes.

Every 50-cent jump in the cost of gasoline takes $70 billion out of the U.S. economy over the course of a year, Hamilton says. That's about one half of one percent of gross domestic product.

The Commerce Department reported Friday that consumer spending rose just 0.1 percent in April, excluding the extra money spent on more expensive gas and food, while wages stayed flat for the second straight month.

Mike Nason, a marketing consultant from Laguna Niguel, Calif., says he's clipping coupons to save money for gas and cutting back wherever else he can. His daughter Chandler, 17, recently settled for a prom dress that cost $170 instead of asking her parents to spend $400 for another that caught her eye.

"In prior years we would have spent more money on the dress, but money has become a big object," he says.

The tourism industry is bracing for an uncertain summer. AAA predicts the typical family will spend $692 on its vacation, down 14 percent from $809 last year. Many of those surveyed said they are planning shorter trips and expect to pinch pennies when they arrive.

AAA estimates 34.9 million Americans will travel 50 miles or more from home this weekend, an increase of about 100,000 from last year. But they will have to do more complicated math to make the summer budget work.

The median household income in the U.S. before taxes is just below $50,000, or about $4,150 per month. The $369 that families spent last month on gas represented 8.9 percent of monthly household income, according to an analysis by Fred Rozell, retail pricing director at Oil Price Information Service. Since 2000, the average is about 5.7 percent. For the year, the figure is 7.9 percent.

Only twice before have Americans spent this much of their income on gas. In 1981, after the last oil crisis, Americans spent 8.8 percent of household income on gas. In July 2008, when oil price spiked, they spent 10.2 percent.

Average hourly earnings, meanwhile, have risen just 1.9 percent in the past year. That's only just enough to keep up with inflation.

The good news is that analysts expect gas to fall to $3.50 a gallon in the coming weeks. In order for household gasoline expenses to return to their historical place in the family budget for the year, gas prices would have to fall by about half and stay that way for the rest of the year.

Demand for gasoline has fallen for eight straight weeks as drivers try to cut back, but higher prices can't keep drivers parked for long. Even with high prices this year, the government expects gasoline demand to grow slightly for the year.

"Drivers try to do what they can, but they have to go almost all the places they go," says David Greene, a researcher at the Center of Transportation Analysis at Oak Ridge National Laboratory and manager of the Department of Energy website fueleconomy.gov. "There's no magic gizmo that will drastically change someone's gasoline use."

Mike Siroub clutched his heart as he described the experience of filling up lately. He owns a Union Oil gas station in Arcadia, Calif., but one of his cars is also a 1975 Oldsmobile.

"Think about it," he said. "If you've got a car with a 30-gallon tank and gas is $4 a gallon and you fill it up, you're out $120."

He says high gas prices will keep him home this weekend. And he runs a gas station for a living. As he greeted a steady stream of customers at his station, he laughed and said, "I have to pay for gas just like everyone else."

___

Associated Press writers John Rogers in Los Angeles and Brock Vergakis in Norfolk, Va., contributed to this story.

Jonathan Fahey can be reached at http://www.facebook.com/Fahey.Jonathan.
http://news.yahoo.com/s/ap/20110527/ap_on_bi_ge/us_gasoline_summer_squeeze
 

Whitewing

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Honestly Larry, I don't know how people do it these days. I've lived outside the country for a number of years now and it's a real shock to see what it costs to fill up these days.

Earlier this week I gave my buddy (with whom I've been staying while here) a $100 to fill up his truck because he's been driving me around taking care of various errands.

He filled up his truck and got a soft drink, $100 gone. :shock:

Another buddy who lives in S. Alabama told me that the folks in the local town are really hurting. After buying food and gasoline, there's hardly anything left. I don't see how America's economy can support these price levels for long. Something's going to give.
 

okfarmer

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I was thinking the other day, he at least delivered on what he was promising...

I used to carry bills in my pocket, now all I have is CHANGE.
 
A

Anonymous

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these are the same oil companies that have used 9/11 to get rich...you support them in your thoughts...

Bush is the one that had the highest prices of all time during his presidency...
 

Kato

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Last Friday gas here dropped to the equivalent of $5.18 a U.S. gallon. The week before it was $5.36. In our part of the country gas was lower than a lot of places, too.

Before the price went up we were paying $3.92, and thought that was pretty cheap. Our prices have been higher than U.S. prices forever. You can see the effect of it by looking at what's driving on the road here. There are a lot more smaller cars and less big old SUV's around. We always buy cars that get in the 40mpg range ourselves, and use the car for everything except what we need the truck to do.
 

hopalong

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shaumei said:
these are the same oil companies that have used 9/11 to get rich...you support them in your thoughts...

Bush is the one that had the highest prices of all time during his presidency...

LIE
Over the course of Obama’s Administration we have seen gas prices rise. When President Obama came into office the average price of gas was $1.84/Gallon and as of May 1, 2011 they were $3.94/Gallon. However, when gas prices went up during Bush’s Administration the media attack him over the high gas prices. Now during Obama’s Administration the media seems to have a “reasonable explanation” for high gas prices.
 

Mike

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Who owns the oil companies? Why stockholders of course....................

Why don't you buy some stock and get rich too? :roll:
 

Whitewing

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Mike said:
Who owns the oil companies? Why stockholders of course....................

Why don't you buy some stock and get rich too? :roll:

Such action on Shamu's part would require that he use logic and reason. We know the likelihood of that happening.
 

Larrry

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obama owns the high fuel prices. From the coal debacle to his debacle of the handling of the gulf oil spill to sitting on his hands on ANWAR he has sent a clear message that he is anti energy unless it is the expensive green energy. At every turn he has made energy production tough.
When he sent that mesasage to the world he drove the price of energy up.
 

Arrow

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"At every turn he has made energy production tough" -Larry-

Truer words were never spoken, Larry.

Check this out...

Voices From The Gulf...

http://youtu.be/ZrLTmIz3wCk
 

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