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07 March 2011

How high before we stop driving?

When I was a kid in 1971 my parents would send me to the convenience store for a pack of cigarettes. They were 30¢ a pack. Gas cost about the same per gallon. I don't remember anyone complaining much but then again, I was 8 and my focus was usually somewhere between Star Trek, DC Comics and Marvel Comics.

There were a lot of people complaining about inflation during the Ford administration. I remember him making some efforts towards ending inflation but any gains he made were wiped out during the Carter years. The point is that as prices have risen, so have the prices of gas and smokes. In the late 1990s I remember asking a couple of smoker friends how much the price would have to rise before they'd quit. Most of them said $5. I don't know if those particular smokers have quit, however I do see a lot of people lighting up despite whatever they're paying now.

From what I can tell the price of a pack of smokes can run you up to $10 in some states. Probably about eight dollars of that is taxes. Regardless, there are people who will come up with the money to buy them. There are some who wake up to how much money is going to the store for cigarettes and stop and I think their number is growing. But what about driving? The price of fuel used to be more cyclical than it is now. Just a few years ago we could count on gas going down starting around 15 October and starting to rise in March or April. Last Winter and more pronouncedly this Winter the price per gallon has gone up. I don't remember what was going on last year but this Winter we've had civil unrest in North African countries. These price hikes are driven by speculation based on an idea of scarcity. We've heard no news of governments restricting sales to the US. There have been no embargoes. Yet prices have gone up 30¢ in the past two weeks.

I've seen projected averages less than $4/gal. for the remainder of this year. It's already at $3.40 here in Texas. Some people think regular will cost $4 by Memorial Day. I'll extend that to July 4th or maybe the end of the summer. I expect it to keep rising and I'm changing my driving habits accordingly.

What's your upper limit?

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