Why $3/gallon Gas Doesn’t Really Matter
The most cogent economic rejoinder is that while the costs of the hardware are real, they’re also sunk–once you’ve bought the car, the marginal cost of the mile is mainly the cost of fuel. That’s correct, up to a point–higher fuel prices should indeed deter some discretionary driving and encourage some carpooling. But when you’re deciding what kind of fuel economy you want in your next car, you are looking at all the costs, and that gets you right back to cents per mile that just don’t depend much on dollars per barrel.
The length of your daily commute is the other key factor that strongly affects how much gas you burn. But if living 10 miles farther from your workplace saves you $5,000 a year in property taxes and other carrying costs on the house you want, that translates into a dollar a mile in savings. If it takes an oversize gas-guzzler to make those extra miles bearable, or even pleasant, you’ll buy it.
marg said,
May 3, 2005 @ 10:27pm
good point. nice house + good car > gas guzzling. don’t have the nice house yet . . . but in time :o)