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Interesting thing to note: The average 'consumer unit' spends 4.8% of their income on gas/oil. So when the price of oil goes up about 20%, it requires roughly 1

Interesting thing to note: The average 'consumer unit' spends 4.8% of their income on gas/oil. So when the price of oil goes up about 20%, it requires roughly 1% more of their annual income... and yet people still claim that the price of gas is 'killing them'.

paulhart 17y ago
It's not the 1% that's killing them - it's the fact that they're spending at their limit and they don't have that 1% available. "Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." -- Charles Dickens, 'David Copperfield'
- nostrademons 17y ago
  I think this point doesn't get enough attention from people whose salaries are big enough to save lots of money. If you make $60K after taxes and spend $30K, then you can easily eat a $300/year increase in gas expenditures. Your savings rate goes from 50% to 49.5%, big whoop. But if you make $31K and spend $30K, and gas goes up $300/year, it's eaten up a whole 30% of your savings rate. And if you make $30K and spend $30K and gas goes up, you're screwed.
jules 17y ago
If the price of gas/oil goes up, the price of other goods goes up as well. But that's probably not what they're complaining about ;)
diego 17y ago
I met very few people who complain that the price of gas is 'killing them'. What you hear is the voice of a minority who either spend much more on gas or just like to complain about it. Edit: why the downvote? Doesn't it make sense that those who are vocal about how gas prices are killing them are those who spend _way more_ than the 'average consumer unit'? If gas represents 20% of your income instead of 5%, you are much more likely to complain when prices go up. This will be the case for people who make less than average, have long commutes and older cars.
- olihb 17y ago
  Maybe it's because people make such a big deal about it. You see the price of gas a couple of times each time you got to work and news anchors will do a story about the price of gas each time it goes up a couple cents. In contrast, we never see the price of bread or jam as often as we see the price of gas. I guess it's an observational bias.
gojomo 17y ago
An effective 1% pay cut you weren't planning for could be a big deal. But also: we've seen swings of +95% within the past 3 years -- so at the peak, people were complaining about an effective 5% pay cut. And not everyone complains. I have a tiny commute, a professional job, and live in an expensive city where housing costs dominate -- so even double the gas price is a curiosity ("OMG I've never seen a tank cost that must") rather than a serious pain-point. On the other hand, many people are far above that 4.8% average spend. They have long commutes and fuel-inefficient cars. Poor people, especially, tend to spend relatively more of their income on gas. So when the price of gas goes up 95% (as it did from Jan-2006 to Jun-2008), and you have an older car and above-average commute -- you may have just taken a 10%-plus pay cut, when you may have been living hand-to-mouth already. Such people are honest about higher gas prices "killing them".
- Xichekolas 17y ago
  Fair enough. And it's true that poorer, or more rural, drivers spend a much higher percentage of income on gas. See excellent graphic by the NYT on this: http://www.nytimes.com/interactive/2008/06/09/business/20080609_GAS_GRAPHIC.html http://www.nytimes.com/interactive/2008/06/09/business/20080... I think I was reflexively lashing out against some people I know that constantly complain about gas, yet choose to drive large trucks and definitely aren't struggling to make ends meet. For them I suppose it's just another topic for small talk, much like the weather.
  - biotech 17y ago
    Maybe those people should buy oil futures, or stock in energy companies then. That way, when oil prices rise, they can cash in on their investment and cancel out the higher gas prices. If they have some financial leeway, they don't have to be a slave to gas prices.
anamax 17y ago
> The average 'consumer unit' spends 4.8% of their income on gas/oil. That's only counting direct expenditures. Gas/oil is an expense for almost every other cost as well, especially food.

paulhart 17y ago

It's not the 1% that's killing them - it's the fact that they're spending at their limit and they don't have that 1% available. "Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." -- Charles Dickens, 'David Copperfield'

nostrademons 17y ago
I think this point doesn't get enough attention from people whose salaries are big enough to save lots of money. If you make $60K after taxes and spend $30K, then you can easily eat a $300/year increase in gas expenditures. Your savings rate goes from 50% to 49.5%, big whoop. But if you make $31K and spend $30K, and gas goes up $300/year, it's eaten up a whole 30% of your savings rate. And if you make $30K and spend $30K and gas goes up, you're screwed.

jules 17y ago

If the price of gas/oil goes up, the price of other goods goes up as well. But that's probably not what they're complaining about ;)

diego 17y ago

I met very few people who complain that the price of gas is 'killing them'. What you hear is the voice of a minority who either spend much more on gas or just like to complain about it. Edit: why the downvote? Doesn't it make sense that those who are vocal about how gas prices are killing them are those who spend _way more_ than the 'average consumer unit'? If gas represents 20% of your income instead of 5%, you are much more likely to complain when prices go up. This will be the case for people who make less than average, have long commutes and older cars.

olihb 17y ago
Maybe it's because people make such a big deal about it. You see the price of gas a couple of times each time you got to work and news anchors will do a story about the price of gas each time it goes up a couple cents. In contrast, we never see the price of bread or jam as often as we see the price of gas. I guess it's an observational bias.

gojomo 17y ago

An effective 1% pay cut you weren't planning for could be a big deal. But also: we've seen swings of +95% within the past 3 years -- so at the peak, people were complaining about an effective 5% pay cut. And not everyone complains. I have a tiny commute, a professional job, and live in an expensive city where housing costs dominate -- so even double the gas price is a curiosity ("OMG I've never seen a tank cost that must") rather than a serious pain-point. On the other hand, many people are far above that 4.8% average spend. They have long commutes and fuel-inefficient cars. Poor people, especially, tend to spend relatively more of their income on gas. So when the price of gas goes up 95% (as it did from Jan-2006 to Jun-2008), and you have an older car and above-average commute -- you may have just taken a 10%-plus pay cut, when you may have been living hand-to-mouth already. Such people are honest about higher gas prices "killing them".

Xichekolas 17y ago
Fair enough. And it's true that poorer, or more rural, drivers spend a much higher percentage of income on gas. See excellent graphic by the NYT on this: http://www.nytimes.com/interactive/2008/06/09/business/20080609_GAS_GRAPHIC.html http://www.nytimes.com/interactive/2008/06/09/business/20080... I think I was reflexively lashing out against some people I know that constantly complain about gas, yet choose to drive large trucks and definitely aren't struggling to make ends meet. For them I suppose it's just another topic for small talk, much like the weather.
- biotech 17y ago
  Maybe those people should buy oil futures, or stock in energy companies then. That way, when oil prices rise, they can cash in on their investment and cancel out the higher gas prices. If they have some financial leeway, they don't have to be a slave to gas prices.

anamax 17y ago

> The average 'consumer unit' spends 4.8% of their income on gas/oil. That's only counting direct expenditures. Gas/oil is an expense for almost every other cost as well, especially food.