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Gas Prices Got You Down? Ditch Your Car

by Rick on October 14, 2010

Have you noticed a little more pain at the pump this week? I sure did – I had to pay $2.69 a gallon for gas yesterday. And that was at the cheap-o place. Yikes!

CNN is reporting today that gas prices nationwide jumped 8 cents a gallon compared to two weeks ago. The folks at Lundberg Survey tell us the average cost for regular was $2.77 last Friday, and we can look for another nickel increase, according to surveyor Trilby Lundberg.

In a cruel twist, the increase in fuel prices is blamed on – wait for it – the bad economy. But isn’t the torpid economy supposed keep gas prices low? Well, yes, but then, no.

Here’s what’s going down: as well all know, the economy is face-planting, due in part to lousy employment numbers (no work, no spend). To juice the system, the Fed is expected to  ”increase the money supply” – i.e. make more money.

This “quantitative easing,” as it’s called, is supposed to make things easier on consumers. But in a nasty bit cause & effect, minting more money drops the value of the Benjamins already in circulation, leading to an increase in, among other things, the cost of crude oil. Expensive crude equals expensive gas, and crude prices have already jumped nearly $10 a barrel since September 21 just in anticipation of the Fed’s expected action.

For the last couple years, the tanked economy has limited demand and kept gas prices low. Now that this upside to the downturn is starting to evaporate, will the cost of a fill up keep creeping up? One of the known risks of quantitative easing is hyperinflation. And even if we avoid inflation, what happens when (if?) the economy ever recovers from it’s 2008 meltdown (thank you, GW)? Will the gas prices jump back to $4 a gallon? Personally, I would put good money on it. (Just think, if I win that bet, I can afford to buy gas.)

Gas prices like this sure make the Nissan Leaf electric car a lot more attractive, don’t they? Sure, $32K is a lot to shell out for an economy car, but you get some nice tax credits that drop the bill to the mid-20s, and YOU NEVER HAVE TO BUY GAS. Did I mention that YOU NEVER HAVE TO BUY GAS.

Of course, if you’re like me and your budget won’t let you turn over a new Leaf, you can always buy a bike instead. It also doesn’t use gas, and it’s a lot cheaper than a new Nissan. Plus you’ll get much nicer calves.

Tell us what you think: Are you feeling the bite of the gas prices? How do you reduce your car miles? Give us your thoughts in the comments below.

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