Great down to earth article that brings up what I've been saying about the average American consumer http://www.csmonitor.com/2005/0706/p01s01-usec.html

Many middle to upper income people do not worry about the impact of gas on their budget.

The best quote in the article though explains in better detail what the real issue is:

"...what Mr. Lenard is hearing from gas-station owners, who say they are selling the same amount of fuel, if not more, as prices increase. "People don't drive because they want to," he says. "They drive because they have to. And there is very little in the way of driving less that people can do."

Without alternatives in fuel or mass transit, higher gas prices are simply a regressive tax paid by working Americans to oil producing countries...

Good article! I'm going to promote it.

I found it on www.peakoil.com which is a great up-to-date news site, but I like the conversation/commentary here better.

This shows that investments need to be made now by communities in developing more options for people before people start refinancing their houses to afford the gas needed to get to the supermarket.

Great article.

Energy still makes up a relatively small percentage of a family's budget. Despite recent increases, by historical standards the $60 a gallon price is still relatively cheap compared to the peak time of the 1970s, when adjusted for inflation.

We know that inflation numbers from the CPI are complete bullshit (see the The Core Rate if you haven't already done so) -- food and energy costs are not even taken into account, not to mention Hedonics (whoopee!). Energy costs drive up the costs of everything in a family's budget, not just gas.

But also, sadly we must conclude that energy prices are not nearly high enough to influence normal "consumer" behaviour.

The operating assumption of critics of the CPI numbers is that the tinkering has consistently resulted in understating the inflation rate. If this is so, then oil is even farther from its inflation adjusted high than the official figures.

Just a thought.

Personally, I think that trying to correct oil prices for inflation is a little iffy since oil prices have a demonstrable impact on the price of nearly everything else, thus oil prices single-handedly have a large impact on the CPI, no matter how it is calculated. I believe oil is unique (or nearly unique) among commodities regarding this aspect of the nature of its impact on the world economy and inflation rates.

"The operating assumption of critics of the CPI numbers is that the tinkering has consistently resulted in understating the inflation rate. If this is so, then oil is even farther from its inflation adjusted high than the official figures."

That is absolutely correct. Now here's another thought:

Most people are willing and able to pay for a taxi to take them to an event at a city they're visiting as I recently did in Portland--$14 including tip for a roundtrip of about 40 blocks. The town I often need to go to for specialist appointments is a 50 mile roundtrip, or just under one gallon of gas in my Prius, and take place at least twice a month. If I'm willing and able to pay $14 to go 40 blocks, then I'm likely to be willing and able to pay at least that much if not more for the gallon of gas it takes to make my appointments because they are NEEDS not WANTS. Fortunately for those not as lucky financially, there's our collective transit system, which I took for years at other locales. The point is that for me personally I could tolerate gas at $20/gal, and a number of others will too. But I think the economy will become dysfunctional somewhere between 5 and 7, which is to say that as we go from 3 to 5 the economy turns ever-further down.

As far as fuel prices go, where the pain is really felt is for people and companies actually provide transportation: truckers, airlines, etc. Ordinary folks will feel high oil prices more in the rising cost of consumer goods (a secondary effect of high oil prices) than in their trips to the gas pump (the primary effect everybody focuses on).

So then the trick is to make sure that people understand exactly what is driving all those costs up and show them how they can change their consumption habits.

We need to develop more intermediate means of transportation other than a choice between walking, biking and driving.

I saw something about electric bikes - safer than motorbikes and much easier/faster to ride than normal bikes

I remember from my recent trip to SE Asia that a small tuk-tuk transported my sister and I all over Angkor Wat all day for about 2 liters of gas.

Getting rid of trucks except for short runs from rail hubs would help.

I remember Simmons talking about how traffic is really the worst enemy of efficiency.

We should rezone all inner cities to be only buses, cabs, bikes, and trucks during off peak hours. Or at least charge really big fees to enter the city.

Higher gas prices are NOT regressive. They affect the upper-middle-class far more proportionally than they do the poor. The poor who DO drive (a small subset of the poor) drive much less often, for far shorter distances, and in more fuel-efficient cars than do Patio Men in exurbia.

More here: http://mdahmus.thebaba.com/blog/archives/000019.html

When you repeat this canard, you are falling into the trap of the suburbanites who are the source of the economic disaster we're all debating here.

Its not transortation you should all be worryed about its food. Oil up food up. While most can afford $8 a gallon we wont be able to if we are paying $10 for a slice of bread. We can all stop driving and start walking but we cannot stop eating.

Higher gas prices may not be regressive, but higher prices for food and most consumer items may very well be. The jury still out on both, at least for me, though I do not see the poor doing well in either case as prices rise.

Oil up, cost of food up. Yes. Surely you guys have been in a grocery store lately. I found myself regretting that I hadn't tracked food prices over the last year for particular items I always buy. So, I can only say, anecdotally, that they are up about 30 to 40% from this time last year.

With regards to cloth bags replacing plastic bags in Oz, this trend has been going on for a year or two now.

The major Sydney papers have had several rounds of giving away cloth bags with weekend newspapers, and "green bags" are sold cheaply in all the major supermarkets.

Just from my own random observations I'd say around half the customers who go through supermarket check-outs at the same time I do use them (though my area may not be typical of Australia as a whole)...

"Oil up, cost of food up. Yes. Surely you guys have been in a grocery store lately. I found myself regretting that I hadn't tracked food prices over the last year for particular items I always buy. So, I can only say, anecdotally, that they are up about 30 to 40% from this time last year."

Another exaggeration which doesn't help.

The stuff I buy costs exactly the same as it did last year. Berries are on sale for $3/clamshell just as often as they were last year and the year before. 12-packs of soda go on sale for $2.50 just as often. Bread (see above) hasn't gone up. Etc.

"ts not transortation you should all be worryed about its food. Oil up food up. While most can afford $8 a gallon we wont be able to if we are paying $10 for a slice of bread."

My last comment to this apparently got lost. Crap.

Anyways, $8/gallon doesn't point to $10/bread LOAF, much less slice. Exaggeration hurts you; it doesn't help. The cost of oil in today's loaf of bread is perhaps 5 or 10 cents on the dollar; which means that if oil rises by a factor of 10, bread still wouldn't get even 5 times as expensive as it is today.