Tuesday, June 10, 2008

An examination of gas prices

I am told that a year ago gas was $2.00/gallon. Today it is $4.00/gallon.

My expectation was that as prices rose the economy would grind to a halt and I have been surprised that it hasn't happened.

Looking at the figures, I think I can see why.

If you drive a car that gets 15mpg and commute 20 miles to work each day you have to drive 200 miles a week. The cost difference to you with gas at $5.00/gallon is $8.40 per day if $2.00 per gallon is your base line.

Is it likely that most drivers have discretionary income of $8.40 per day. Do you?

There was a story in the AZ Republic yesterday reporting on the increase in public transit ridership. The reporter described it as having "soared" 18% in recent months.

She went on to describe the two types of service offered, express and traditional stating that you could ride the express for "a small amount more". Traditional is $1.25, express is $1.75. So in this case a 40% increase is a "small amount" but increase ridership 18% and it has "soared".

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