Like many organizations in these gas-conscious times, Kelley Blue Book (KBB) and the LA Times (LAT) are fascinated by the negative effects of high gas prices on consumer spending. So KBB did a study and the LAT reported it. The two giants in intellectual research found that, in short, $4 to $5 gas has forced people to spend less money on other shit [paraphrasing]. For example, people aren't going to the movies as much, now that they are spending more on gas. [Do you know what a movie theater looks like? Click over to the LA Times, and you can not only read "less money on movies" but see a picture of a real line at a real American movie theater.] Other things people aren't buying as much of: expensive coffee, vacations, clothing, restaurants, carwashes, DVDs and high-quality marijuana. OK, I added that last one. But how do we know that the rising costs of other consumables– most notably food– don't account for the cutbacks?
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I wonder if the food prices are the real culprit here, though less obvious.
Speaking only for myself, our gasoline cost for two cars is only $40 higher per month than 2 years ago…but food (grocery only) is almost $150 more per month over the same period. Neither consumption habits have changed over the same period.
I clicked through to the article, and I question their methods. According to this article, 7% of respondents have given up electricity entirely!
I agree with ash78 the rising food costs have effected me way more than the price of gas, mostly because we cut our fuel use down as much as possible 2 years ago. But I have seen my food cost almost double in the past year, even before the new baby.
Nice bud Justin, but I don’t think people are cutting crystally stuff like that out of their budget, takes the pain of gas & food prices away.
@ash78:
But gas is sooooooo high! It has to be the gas prices! :) (Nice to see a Consumerist over here)
Yeah, the cost of everything has gone up. I don’t go to movies in the theater anymore because it costs too much at the theater, not the drive there. And that goes for all my entertainment type stuff. Gas isn’t hurting me, it’s the rising costs of everything else.
And Justin, just like with toilet paper, you should never skimp on marijuana.
Hmm. 5 years ago gas cost me about 3.3% of my gross income in a month.
Now it costs me about 2.7% of my income. Heh, my pay has grown faster than the price of oil.
“I wonder if the food prices are the real culprit here.”
Seems to me it’s kind of a distinction without a difference. Fuel prices and the diversion of corn for fuel are two of the big factors driving up food prices, aren’t they?
thalter :
I clicked through to the article, and I question their methods. According to this article, 7% of respondents have given up electricity entirely!
You guys still use electricity?
that is a beautiful looking plant right there.
shame I gave it up.
Buy less expensive coffee? Over my decaying corpse…
I spend less on coffee only because both of the coffee places that I like went out of business; so, now I brew my own (I’m an engineer, we run on coffee). I have significantly cut back on driving and kept my fuel bill at about $25 per week versus the $20 per week I was paying four years ago. My food expenses have certainly gone up, but that could also be due to changes in the type of food I buy due to my increasing income over the past four years. My entertainment expenses have risen greatly as well.
There’s also the reverse wealth effect of declining real estate. Losing $35k in home value in a single year can sure make you feel poor even if you gained equity for the previous 5 years. Some of the activities listed in the LAT article seem like frivolous luxuries (coffee, movies, dining out, baseball games). Perhaps the current amount of those activities is appropriate long-term and that the previous amount of those activities was excessive and based on spending beyond one’s means.
As for food, I can see an obvious rise in prices. However, I assume that most of the additional costs in food are due to energy costs not biofules diversion. The Biofuels Digest notes that the corn portion of a box of corn flakes is 2.2 cents, so even a 10x increase in corn prices would have little effect on a $4 box of cereal.
http://www.biofuelsdigest.com/blog2/2007/08/27/cost-of-corn-in-a-box-of-corn-flakes-22-cents-why-are-corn-prices-being-blamed-for-food-price-increases/
I wonder what Kevin’s explanation is for his pay increase to make gas cost less? Maybe he lives closer to work, maybe he drives a more fuel efficient car, maybe he graduated from college?