Are You Preparing for Higher Gas Prices?

$55.12. That’s what I just paid to fill the tank of my Nissan Maxima—a mid-sized car. I generally view $50 fill-ups as the tipping point on gas prices. You can buy dinner for four at a moderately priced restaurant for that kind of money. That’s the kind of money that makes noticeable dents in a budget. And it’s ongoing; you’ll pay it every time you fill up.

Most of us seem to get seriously concerned only when gas prices set a new record. When prices pull back—even a little—we settle back into the comfort zone we call “normal”. Right now, with gas prices hovering in the $3.50 to $4.00 range—we seem to be right about on the border of the “serious concern zone”. We’re watchful, but not overly concerned.

Despite all of the rosy predictions of energy independence in the nearly 40 years since the 1973 OPEC Oil Embargo, we’re more tied to oil from unstable sources than at any time in history. The current rumblings in the Middle East and the gas price spikes they’re causing make our inability to deal with our energy problems on a collective basis painfully obvious.

That means we’re on our own folks!

Here’s my thought on a constructive long term energy outlook: assume the worst with gas prices and be prepared—even if they seem to be behaving, assume it will get worse.

The evidence of that assumption is playing out right now at a gas station near you! We aren’t powerless though, not if we if we have a plan or two. But just understand that options are harder to come by as gas prices move higher, and make a commitment to do something. Here are some ideas to get you started.

Saving Gas on Transportion

Get a bicycle. You did it as a kid, why not do it as an adult? A bicycle won’t replace a car, but depending on where you live it might enable you to eliminate a few short car trips each week. Get a bike with a large basket for local runs to the store, the bank, the pharmacy or any place within a couple of miles of home. Not only will this cut back on gas, but it’s also great exercise.

Invest in a moped. OK, let’s say that riding a bicycle even for local errands sounds like too much work—let’s put a motor on the bike. Also known as a moped! If you’re interested, Matt Jabs at Debt Free Adventure has a great post chronicling his moped purchase. If you think it might work for you, Matt says you can get over 100 miles per gallon, and you can buy a late model used version for well under $1000. By the way, if you think the weather in your area might be a problem, consider that Matt lives in Michigan!

Sell your gas guzzler now! I know, this sounds radical. But it’s a fact that a gas guzzler will be a liability without redemption if gas prices go much higher from here. You’ll pay through the preverbal nose every time you take it on the road and worse, no one will want to buy it from you. Conversely, the price of economy cars will soar. Bad trade off? Sure, but that’s why you want to do something about this before things get out of hand.

Saving Gas Getting to Work

Bring your lunch to work. Kay Akers came up with this brilliant idea in a post she wrote on the same topic at Couple Money a few days ago. Most of us are well aware of the amount of gas we use commuting to and from work, but few of us ever consider how much added fuel we use driving out for lunch every day. The trips may be short, but lunch hour traffic can be brutally heavy in and around many office parks, and that kind of driving is particularly hard on gas mileage.

Set up a work-at-home arrangement with your employer. High gas prices function like a pay cut at work. The only way to offset this is by cutting back on commuting. And the most effective way to do this is through work at home arrangements. As I see it, there are at least three ways to approach this and how far you go with it will depend on how high gas prices go.

  1. Ask your employer to allow you to move your job to full time work at home. If they agree, higher gas prices will have only the slightest effect on your lifestyle. And even if they say no, it may open up the negotiations.
  2. If your employer won’t agree to full time at home, ask for one or two days per week. Each day of work at home will reduce gas consumption from commuting by 20%. That’s worth negotiating for.
  3. If your employer says no to work-at-home, and you’re sufficiently concerned with high gas prices, it may be time to start looking for new job that will.

One light at the end of the tunnel here is that even if you aren’t successful in getting a work at home concession during a period of low or stable gas prices, the arrangement may become more popular if gas prices take off. Still, I’d rather have that lined up before it gets to that point.

Start your own home business. One of the underappreciated aspects of gasoline spikes is the economic impact, and that has a way of translating to the job front. Everything in the economy is tied to the price of a gallon of gas, and when fuel prices rise, the economy usually weakens and layoffs follow. One of the best preparations for that possibility is having your own business, one you can operate from home. Even if you only do it part time for now, it may be something to expand in the event you lose your job—which if history is any indication, is far more likely the higher gas prices go. If nothing else, the extra income will help you handle higher fuel bills. Call it your Plan B.

What do you think? Can you come up with ways we can deal with higher gas prices? Simple ideas, radical ones—we’re looking for ideas here…

19 Responses to Are You Preparing for Higher Gas Prices?

  1. It seems like we’re less apt to notice (read: complain about) gas prices when the prices creep up slowly over the course of months.

    Still, I think that those are great tips — regardless of what gas prices are!

  2. Chris – Or we’ve become masters at rationalization! As much as we like to go back to normal as soon as prices ease off, each time they do they’re still higher than they were before the most recent spike. Look at the run up in 2005–gas was a buck-something before the spike, ran up to over $4, then dropped. But never down to a buck-something.

    That screams out for a long term plan.

  3. Kevin — The difficulty of this is compounded if you’re in a poor job market. If you’re out of work and need something (anything!), you’ll need to consider the commuting distance even more, especially if carpooling or public transportation aren’t an option.

    That being said, the ‘good news’ about high gas prices may just be that it forces us to re-evaluate our expenses, many of which could be unnecessary.

  4. Chris – The poor job market–and that’s usually what comes with high gas prices–is the reason we need to be prepared in advance. Once prices spike, the effects on the job market and on the price of almost everything are out of balance, and options are harder to come by.

    My own sense is that we’re well past the point of complacency, and need to see this as a fundamental economic condition that’s every bit as important as our careers, investments and savings and consumption patterns. And if you think about out, energy prices in general and gas prices in particular, affect each one of those.

  5. Good points Kevin.
    People have to offset the rising gas prices with changing behaviors in other areas of the budget. The best hedge against higher gas prices/inflation is to be debt free. Easier said then done, but start analyzing what you can sell, pay off, and attack unnecessary parts of wasteful spending. Who knows, you might have to sell your house (radical)…..that could be the bigger problem instead of gas prices….
    Thanks for sharing

  6. Gregg – Excellent point about debt. It’s hard enough to carry debt during normal times, but when gas prices spike and take nearly everything else up with them, debt can be a real killer. Getting rid of it is another preparation for high gas prices, and nearly high anything!

  7. I’m selling the moped because I replaced it with a gas-saving motorcycle. About a month ago I purchased a 2007 Honda Rebel for only $1,400. The bike gets 80mpg and has very low miles… it was a fantastic buy. I’ll be selling the moped on Craigslist next week for $800. The moped served me well but was replaced with the motorcycle because it allows me to keep up with traffic rather than having to ride off to the side.

  8. Thanks for the update Matt. OK, so we alter the recommendation then, and add motorcycles to the mixx. Still mopeds might be a good start for someone who isn’t comfortable with a motorcycle–yet. It’s a halfway between a bicycle and a motorcycle.

  9. I agree with Gregg’s comments, too. Some of us may need to adapt some radical approaches to remain financially afloat. Being debt-free is really a good start, certainly.

    Kevin, I also agree with your comments about how gas/energy prices influence everything else. Higher gas prices = higher goods prices, etc. We definitely need to take more proactive approaches in making ends meet (and getting debt free!) in this situation.

  10. Chris – that’s why the whole topic of gas prices is so singularly important. We’re never talking just about the price of gas–there’s an entire price chain reaction that moves through the economy, and usually pretty quickly.

    Trying to adjust to that once it gets started is like playing come from behind in a game your losing badly. Preparation is everything!

  11. I have actually got rid of my car. It is interesting how the move away from city centers has caused a reliance on gas.

  12. David – That’s really the entire problem. If most of us lived closer to city centers (where the jobs used to be when most people lived closer to city centers) we’d have options when gas prices rise. Like walking, biking, carpooling and public transportation.

    Where most people live these days, it’s too far to use alternative methods, and job centers are now so dispersed that public transportation is close to useless.

    Where transportation is concerned, we’ve really become a one-horse economy.

  13. LOL, I am so over the “gas guzzlers” and wonder when folks are going to let them go!!! Until we begin to manage our gas consumption, we will continue to be held “hostage” by the countries that send us the supplies.

    My Blog: A Story of Hope!
    http://survivingunemployment.weebly.com

  14. Angela – It’s like a crisis we voluntarily participate in! Of late, I’ve noticed a large number of Hummers on the road. They’re major gas guzzlers, and they seem to be getting more popular as gas prices rise. I can’t figure it out…

  15. Kevin, that is a really good point. I am trying to find the details, but there was a Lawsuit in the 1970s, the City of San Fransisco sued I believe the US government about the redirection of Federal Funds from Public Transportation to Highways.

  16. David – Not to be defeatest about public transportation, but I really believe the moment on that as passed. The massive amount of exurban development, spurred on by relentless building of super highways into the countryside, has caused developmental patterns that can’t be fixed even by massive investments in public transportation. You can build a rail line to the exurbs, but you can’t rebuild metropolitan regions in a way that will make them feasible. The investment will be wasted.

    Public transportation worked because the vast majority of jobs were in city centers–the hubs of the rail and bus systems–and population corridors sprang up around those lines. Perfect.

    Today we have populations growing along once rural highways that go all the way into other states. In the process, jobs have fanned out of city centers and into dispersed edge cities and suburban locations. It’s no longer traveling from a defined Point A (where everybody lives) to even better defined Point B (where everybody works).

    This once again is why what we do on an individual level is so critical.

  17. Thanks for mentioning my article. I hope more businesses to allow employees to work at home. It’s all about changing the culture.

  18. Kay – Thanks for making such a brilliant point! I agree with you, it really is time to start changing the culture to make work at home more “normal”. Not only will that cut back on fuel consumption, but it might also reduce stress and all the health related issues that brings.

  19. Gas prices are always a pain in the budget. You try to be conservative, but it will still continue to be more. Luckily, I have the ability to work from home, but if I do work in the office, then I always bring my lunch. I not only save on my lunch, but also don’t have to drive more than I should. Nice post Kevin.

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