RNC Campaign Against Dem Gas Tax Plan

Democrats have consistently stood in the way of lower energy prices for American families. Whether it's higher taxes, more regulation, blocking new exploration, or oposing the conservation measures in last year's energy bill, Democrats in control of Congress would mean higher prices at the pump.

JENNIFER OPENSHAW
Missing real inflation signs
Gasoline is most visible pain, but it's not our biggest nemesis
By Jennifer Openshaw
Last Update: 7:07 PM ET May 23, 2006

LOS ANGELES (MarketWatch) -- The soaring price of gasoline is all I hear about these days. Three bucks a gallon, and likely to move higher this summer.

Of course, shelling out $50 or $60 at the pump hurts -- up 50% from a couple of years ago. That's hard to take, especially when the experts are telling us that "inflation is in check." But like all personal finance matters, we should look at the big picture and put things in perspective.

It all came home to roost when I heard a friend talk about shopping around town for the lowest gas price. Seems that everyone I know has found their "cheap" gas station.
I checked out my friend's cheap find. Five miles out of the way. Sat in a line for 15 minutes with four cars in front of me. Three of those four buyers filled their tanks. Then they went inside to buy a road soda and a snack. They drove out of their way to save a buck or two on gas, then plunked down four bucks for junk food.

What's wrong with this picture? Time for a closer look. Because maybe we've never had it so good.
OK, if you own a vehicle getting 20 miles per gallon and drive 15,000 miles per year, you'll consume about 750 gallons of gas each year. The $1-per-gallon jump since early 2005 costs you $750 per year, plus or minus.
The Bureau of Labor Statistics likes to quantify what we earn and spend on average. According to their figures, we spent about 5% of our disposable income on gasoline in 1981. That figure dropped to 3.7% in 2004. With the recent increase, I suspect it's up to about 5% again.
But those same figures reveal that we spend 5.6% of income on "food away from home" and 5.1% on entertainment and 32% on housing.

A BLS study released Monday shows that U.S. families spent 43% of their incomes on food in 1901. By 2003 that figure dropped to about 13%. And our real disposable incomes -- that is, our incomes after inflation is considered -- have risen some 30% since 1967.

So $750 per year is a lot, especially with the prices of such big-ticket items as housing, college education and health care rising rapidly. But, while visible, this latest uptick back may not really be all that big in the grand scheme of things.
Signs of the times

It's human nature to react to what we see the most. Gas prices, by law in most places, are posted. So everywhere we go, we see $2.91, $3.09, $3.21. Ugh.
Now, what would we think if Starbucks posted the $3.60 for a caramel Frappucino or if Applebee's announced in big letters its $7 glass of wine, which isn't even posted on the menu let alone on the curb? What if your major credit-card company posted its annual price of $180 for every $1,000 of consumer debt you take on?

A gallon of milk is $3.29 at my grocery. At last, gasoline -- made from a nonrenewable resource imported in many cases from halfway around the world -- is almost as expensive. A gallon of Coke in 12-ounce cans will set you back 5 bucks; a gallon of domestic beer is almost $9. Why, a gallon of drinking water in 16-ounce bottles is almost $7.
If those prices were posted prominently on banners outside the grocery store we'd be up in arms about these items too.

Not price but cost
My best advice for any item in your budget: Focus on cost, not just the price. Cost is price times the quantity consumed. So if we're talking about consumer debt, you should look at how much debt you have. Not just the interest rate.

If we're talking about eating out, let's look at the drinks. Not just the price, but how much and what you consume. A family of four eating at a casual-dining spot, with one beer, one glass of wine and two sodas or milks for the kids, runs up a tab of $16 just for the drinks -- plus tax and tip -- for a total of $19 or $20. Do that once a week for a year, and you've gone through $1,000 -- which more than pays for this year's gas price increase. And about those road sodas and snacks ....

If we're talking about gas, of course we should care about the price. But also, let's care a little about how much we drive and how far we drive. I don't think $750 a year justifies running out and buying a new car or even a new hybrid for $30,000, unless your car was ready for replacement anyhow.
You've heard it before: Combining trips, taking one less weekend outing, joining a carpool, agreeing to telecommute or enforcing a "no-drive" day will all save. And it makes sense to do this.

But before we throw in the financial towel over gas prices, we should look at the big picture and examine our other habits first. End of Story

Jennifer Openshaw, CEO of Openshaw's Family Financial Network, is host of ABC Radio's "Winning Advice with Jennifer Openshaw" at www.winningadvice.com. She can be reached at openshaw@winningadvice.com.

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