$5 a Gallon For Gas; End Of The World, Or Ripe For The Picking?

Well, it really can be a coin flip as to who is hurt worst by the big rise and oil pushing $150 a barrel today. It’s a shame on one hand, but being a “glass half-full” guy, I can see the silver lining that I’m actually enjoying…

It Is Not Cheap

Well, “enjoying” might be overkill, but there ARE some things that will be better off with gas needing to be purchased with a bank loan. Combine that with J.D. Power & Associates stating that overall auto sales are down about 8 percent so far this year and large cars/trucks sales dipping an outrageous 23 percent and we’ve got an epidemic, or is it an opportunity?

There’s no strange puzzle as to why new cars aren’t selling, people have a strong inclination that gas isn’t going to be going down anytime soon. At the same time, we realize that something better is just over the horizon. Whether that be a change in the government come election time in the US, or whether it be the car makers kicking out vehicles that don’t guzzle so fast.

I’m not a political pundit by any means, but I feel there is something to be said for the candidates getting grilled about the gas prices now. You’d think they’d need to make a change when they get their place in the Oval Office, but stranger things have happened.

On the other side though, people aren’t buying because they know that car makers are at the cusp of change now. All vehicles are going to need to get 35mpg by 2020 as per the CAFE standard Congress passed last December. This isn’t going to START in 2019, as with any business, they’re building and researching now. People know that the cars that are being pushed out now are end-of-life models that are going to need redesign to meet what Congress is pushing.

Looking To Capitalize on High Gas Prices

Several companies are chomping at the bit and being proactive on this now. They’re taking advantage of the big companies being so big and getting in when they see the opening. As with any entrepreneur, these companies see a hole that needs filling. Jumping in now is going to turn a pretty penny for them before the big manufacturers can work this change into their environment.

Take the Aptera for example. They’re saying this thing can potentially get 300mpg. That’s leaps and bounds above what anyone else has talked about in the past and certainly will get some good ink from around the world if it is possible. Here’s a video about it:

You Can Probably Get a Steal Now

On the flip side and “glass-half-full” mentality though, if you’re in the market for a big rig now, there may not be a better time to jump on it. Dealerships are piling up cars on their lots and not being able to push them now. If you just can’t fight off that new car bug and need one now, consider some of these models that are probably dirt cheap now:

The big V-8 engine Jeep Commander caught on with its catchy phrase of “got a Hemi”. But now the catchy “got a Hemi” phrase has run its lifeline and people are realizing what that really means: “Got a Deep Pocket Book”? The beastly car has dropped 48 percent in sales this year and tops the charts. 13mpg just isn’t going to cut it if you’re on a budget, but like I said, if you’ve got the extra cash, you could probably walk away with a pretty sweet deal right now.

Next on the chopping block is the Nissan Titan. It never really was able to get up to snuff with US rides from Dodge, GMC, and Ford and the gas crunch has made it even tougher for the foreigner and sales are off 45 percent for the year. It is steep, but that’s not to say that the big dogs aren’t hurting as well – Dodge Ram sales are down 27 percent, Chevy Silverado sales down 26 percent, and Ford F series sales are looking good in comparison down just 19 percent.

Hummer sales aren’t actually as bad as I would have thought, I would guess they’d be topping (or bottoming) the list so far this year being down just 36 percent. It’s not rocket science why though. They are built on the same frame as the Chevy Suburban, but offer far less room. This ride was destined to failure I think because it only offered uniqueness. I rarely see one pulling anything and aesthetics and Hollywood keep this one alive. It doesn’t have the space capacities needed, nor the fan base to keep it flowing. Unless they completely overhaul it, I think it’s reached the end of the line.

Chrysler’s sweet deal to lock in $2.99 gas seemed to do the opposite of what they were trying to push. The beefy Chrysler 300 sales are down 31 percent.

Know Where Your Money Goes

Yes, I drive a Suburban and yes it costs me $100+ to fill it up, but it’s not killing me yet. I have a second car that I drive that sees about 10 miles a week. I live very close to my office building; so I offset the big ride gas prices with realizing that I only drive one car. Per month I’m putting in $200-ish for gas. Is it killing me? No. I can afford it now. I budget my money properly and understand that gas isn’t going to be coming down till it has some competition.

People that are complaining about the prices and not doing anything about it (budgeting properly) are going to be the ones that are hurt most by it. Big business isn’t going to slow. We’re all ants in the whole scheme of things and big tires run over ants pretty easily. Roll with the punches and know what is coming. Budget properly and don’t buy any big expenses until you can offset this cost.

Get a raise, don’t buy that flat screen tv, hold off on that vacation for another year. There are plenty of ways to pay for the gas if you analyze what you’re spending now and where you can cut back.

photos by: /travoc/, /chadica/

Filed Under: BudgetingCompensationDebtfinancial educationFrugalGoing Green

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  • FFB

    My wife filled up yesterday and it cost $45. Not horrible compared to some but we drive a Toyota Corolla that a couple of years ago was closer to $25 to fill up. As long as prices level out soon the rest of the economy will catch up.

    This is a great opportunity for car makers. They can make better cars. Those who come up with better mileage now will reap the benefits. I remember when SUV’s took off in the 90’s. It was after a winter of many snow storms here in NYC. Next year you saw more SUV’s on the road. Maybe now we’ll see a similar push but now towards fuel efficient cars.

    FFB’s last blog post..Murphy’s Law Of The Workplace

  • I don’t think as car owners we push our government hard enough to seek other alternatives. We don’t push Detroit hard enough either. I drive an ’07 Tahoe Hybrid. To get E-85 fuel, I’d have to drive 50 miles round trip to get it. Murphy Oil (aka Walmart gas) is now 10% ethanol.

    Like you, it is $100 to fuel my SUV. I drive very little so it sits parked 90% of the time. When we need it, we pay through the nose. Last month with 3 long trips and the driving while we were at our destination, our fuel bill for the Tahoe was $750. I couldn’t have gotten all of the wedding supplies to the wedding without the Tahoe. I’d have been packing and mailing for days to just get it there. I’m figuring it was about as cheap to pay for the gas.

    After all is said and done, I pretty much wish I had gotten a much smaller car and just rented something for the trips. I’d be saving on gas, insurance, payments and maintenance.

    Ginger’s last blog post..RapidBath Pet Bathing System

  • That’s a cool car. I just need one that seats eight.

    Pinyo’s last blog post..Better Health and Finances With 100 Push Ups

  • I think the best thing about gas prices is that it IS finally giving the right push to rely less on gas and more on cleaner sources of energy. Right now it’s painful for consumers, but in the long run the entire planet will benefit.

    Vered’s last blog post..The Blurry Line Between Online and Real-Life Relationships

  • Very nice post! One reason the Hummer H3 is actually down even more in sales than the bigger H2 is because buyers of the H3 are more price sensitive to fuel prices, while those who can afford the $50K+ H2 aren’t as affected by fuel prices.

    Another issue with high fuel prices is that oil is the foundation of our economy in so many more ways than the price of gas for your car. Everything that’s transported to market uses some form of motor fuel (except for some places in PA), the majority of roads are made of oil, tires are largely made of oil, and almost all plastics (many parts of you car, TV, refrigerator, computer, iPOD,, etc, etc…) are made of petro-chemicals. Many paints and other finishes are made from petro-chemicals. Not only is diesel used for harvesting food from the farm to the sea, but it’s also used in making many fertilizers and other agricultural chemicals.

    We won’t run out of oil for a long, long time, but we may run out of cheap oil. Speculators, rising world demand, and falling dollars are doing their best to ensure this. There has almost always been tension in the middle east, and many markets have already taken this into account, but every time a tanker gets sunk, oil prices will go up as fast as the tanker goes down.

    The effects of sharply increasing oil prices on our economy in the short term could be devastating, or at least very unsettling. As the price of oil rises, it will give rise to countless new technologies, which in time will become the basis of many new industries. Between then and now however, things may get a bit dicey though.

    Have a great weekend!!

  • @FFB – yea, I remember the same thing when they took off – they got a quick start!

    @Ginger – I hear you on the ethanol too. I have kicked the idea around too, but our closest station is 100 miles away… Not gonna save much going there, ugh.

    @Pinyo – I hear you. That’s why I keep the big ‘burb. I need the space myself! I thought you only had 1 kid so far. 🙂

    @ Vered – Absolutely agree, we just need to find a way to make “green” profitable. It’s not as lucrative as oil right now…

    @Debt-Free – I never thought of the H3 vs H2 issue, but it makes good sense. H3 is geared toward a less wealthy group. Gas prices at $5 aren’t going to hurt someone making millions, nor their car preferences…

  • Pingback: Hanks Weekly Hangouts #35 (June 22, 2008) | My Investing Blog()

  • I just bought a new car, a toyota Corolla. I found out people are ordering Prius at full MSRP 5-6 months out. The Corollas themselves are getting harder to find.

    So you’re right, at least people are starting to think more frugally about gas, and it’s not breaking them.

    Greener Pastures’s last blog post..The Frugal Olympics – Going for the Gold

  • FFB

    @ Greener Pastures – Wow, if people are ordering Prius’ at full price then they losing out on money. Helping the environment yes. But full price? I have a Corolla and it’s been great. Put it on the highway and it gets great mileage!

    FFB’s last blog post..One Hundred Pushups For A Healthy Fit Frugal Summer

  • Hi Hank

    I’m sure it’s not the first time you’ve been told this, but here in the UK our government thinks it’s a great idea to tax gas a lot so we now have prices the equivalent of $2.60 for a litre. I’m not sure of the conversion to US gallons, but a UK gallon is $11 or so! My 7-seat family car costs the equivalent of $160 to fill up.

    It’s still the case that if you budget correctly and look at alternatives (I’ve started cycling part of the way to work) you can manage the increase.

    Neil

  • I don’t use gas for my car but fuel. Most cabs in the town are using gas. The fuel charge has gone up and then it comes down a bit. I think its just like my blood pressure going up and down.

    Sherry’s last blog post..October $25 Gas Card Giveaway