Latest BS: Gas Prices Thwarting Vacations
Every time I turn on the radio or television I hear news reports that fewer Americans are vacationing due to increased fuel prices. I’m calling BS. I think this is akin to the rampant news reports of shark attacks a few years ago. There was no actual increase in shark attacks compared to previous years; it was just a slow news month. The Republican primary is settled, the Democrat primary all but settled, and news from Iraq becomes less inflammatory each day. The mainstream media is hurting for stories that will sell ads, so why not find an effective tool to complain about fuel prices? This certainly appeals to the average viewer/listener, and isn’t that what mainstream media news reporting is really about: appeal?
So you’ve been planning a vacation for a year, but now fuel prices have soared so high you just can’t afford it? If gasoline was $1 less per gallon, that would make a huge difference, huh? This doesn’t make sense from a marginal cost perspective.
Look at a simple example of driving to the beach. I live 370 miles from the beach. I think this is somewhat typical, as most people can drive to a coast in seven hours or less. Round up to 400 miles for an 800 mile round trip. Assume someone gets only 20 miles per gallon from their vehicle on the highway. That means the vacation will require 40 gallons of fuel. According to this link, a year ago the average price of gasoline in the US was 57.3 cents cheaper than the price as of May 19th. Now, go even further back in time and assume you planned this vacation when fuel was $1 cheaper per gallon.
By my calculations above you need to purchase 40 gallons of fuel so your vacation is now a whopping $40 more expensive. That’s about how much you’ll spend on one family meal during the drive to the beach. Pack some sandwiches and you’ve almost completely recovered that cost.
I don’t know how much it costs others to take vacations, but by the time I’ve purchased food, lodging, and minimal entertainment, it’s difficult to come out on the good side of $800. I’ll naively assume that most family vacations are around $1000. Do people seriously decide to scrap their plans because the total cost is now $1040 instead of $1000, a 4% difference? Even if the total cost was $1100 compared to $1000, is that the difference between vacationing or staying home? That corresponds to driving 2000 miles round trip in a 20 MPG vehicle. Using the exact price difference from a year ago with my 34 MPG vehicle and my actual distance to the beach, my marginal cost would be only $12.47!
I don’t doubt that some people have decided to forego a vacation because gasoline is approaching $4 per gallon, but I doubt that it’s happening on a large scale. If people are indeed making this decision then I question the rationality of it. The price of gasoline and crude oil has also driven up the costs of any type of transportation, including flying. These are relevant factors when planning a vacation. However, I am more than a little skeptical about all these reports of mom, dad, and their 2.5 kids getting loaded into the car and then turning around when they pull into a service station to fill up.
I don’t like paying $4 per gallon for gasoline more than anyone else, but the cold hard reality is that the rising cost hasn’t begun to significantly curb our demand.
It hasn’t slowed us down for vacations, only for family gatherings of questionable importance. Though occasionally I bike to work rather than drive to help save a little cash.
I remember being in Italy in 1997 and thinking that their 1.47 gas didn’t seem too bad until it was pointed out that 1.47 only bought one liter of gas. And for what it is worth, the streets of Italy were packed with cars even with that high of a gas price. I think it is a combination of a slow news day and with congress trying to get the monkey off of their backs and onto the oil companies.