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Some pain, some overreaction

July 1, 2008 - Lee Smith
Back from vacation today. Noticed there is a story on the wire about 9 in 10 Americans being "hit hard" by gas prices. I won't scoff. Gas prices certainly are moving steadily higher, putting the bite on. It must be difficult for people who must drive long distances every day to get to work. Or for those in the transportation industry. Still, it's difficult not to be a little skeptical about just how "hard" everyone has it. The AP story hints that everyone is canceling their summer vacations, selling their pickups and SUVs and investing in vehicles that burn duck feathers, or something. Some of this is natural and correct, and it's all a valuable lesson in economics. When you can't afford something, you buy less of it. Or choose alternatives, such as those little high-mileage scooters that more and more people are driving. Or you weigh your choices. My wife and I stayed in Minnesota during our time off, but we still drove places. We probably put 500 miles on the odometer. At 28 miles per gallon, that's just over $70 in gas. A few years back, the same fuel bill probably would have been around $40. The $30 has to be absorbed somewhere, so we probably cut a small corner somewhere. One less meal out? Maybe. Our situation is our own. Understood. But I know other people who are taking time off, driving to see their families or friends, or heading to some vacation destination, and simply factoring in gas prices. The pain, in other words, is overblown.

 
 

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