Gas Tanks Are Draining Family Budgets

There's less money this summer for hotel rooms, surfboards and bathing suits. It's all going into the gas tank.

High prices at the pump are putting a squeeze on the family budget as the traditional summer driving season begins. For every $10 the typical household earns before taxes, almost a full dollar now goes toward gas, a 40 percent bigger bite than normal.

Households spent an average of $369 on gas last month. In April 2009, they spent just $201. Families now spend more filling up than they spend on cars, clothes or recreation. Last year, they spent less on gasoline than each of those things.

Jeffrey Wayman of Cape Charles, Va., spent Friday riding his motorcycle to North Carolina's Outer Banks, a day trip with his wife. They decided to eat snacks in a gas station parking lot rather than buy lunch because rising fuel prices have eaten so much into their budget over the past year that they can't ride as frequently as they would like.

"We used to do it a lot more, but not as much now," he said. "You have to cut back when you have a $480 gas bill a month."

Alex Martinez, a senior at Arcadia High School outside Los Angeles, said his family's trips to San Francisco, which they usually take once or more a year, are on hold. As he stopped at a gas station to put $5 of fuel in his car — not much more than a gallon — he said the high prices are crimping social life for him and his friends.

"We're always worrying, 'How are we going to get home. We've got less than half a gallon left,'" Martinez said. "We definitely can't go out as much, and we can't go as far."

As Memorial Day weekend opens, the nationwide average for a gallon of unleaded is $3.81. Though prices have drifted lower in recent days, analysts expect average price for 2011 to come in higher than the previous record, $3.25 in 2008. A year ago, gas cost $2.76.

The squeeze is happening at a time when most people aren't getting raises, even as the economy recovers.

"These increases are not something consumers can shrug off," says James Hamilton, an economics professor at the University of California, San Diego, who studies gas prices. "It's a key part of the family budget."

The ramifications are far-reaching for an economy still struggling to gain momentum two years into a recovery. Economists say the gas squeeze makes people feel poorer than they actually are.

They're showing it by limiting spending far beyond the gas station. Wal-Mart recently blamed high gas prices for an eighth straight quarter of lower sales in the U.S. Target said gas prices were hurting sales of clothes.

Every 50-cent jump in the cost of gasoline takes $70 billion out of the U.S. economy over the course of a year, Hamilton says. That's about one half of one percent of gross domestic product.

The Commerce Department reported Friday that consumer spending rose just 0.1 percent in April, excluding the extra money spent on more expensive gas and food, while wages stayed flat for the second straight month.

Mike Nason, a marketing consultant from Laguna Niguel, Calif., says he's clipping coupons to save money for gas and cutting back wherever else he can. His daughter Chandler, 17, recently settled for a prom dress that cost $170 instead of asking her parents to spend $400 for another that caught her eye.

"In prior years we would have spent more money on the dress, but money has become a big object," he says.

The tourism industry is bracing for an uncertain summer. AAA predicts the typical family will spend $692 on its vacation, down 14 percent from $809 last year. Many of those surveyed said they are planning shorter trips and expect to pinch pennies when they arrive.

AAA estimates 34.9 million Americans will travel 50 miles or more from home this weekend, an increase of about 100,000 from last year. But they will have to do more complicated math to make the summer budget work.

The median household income in the U.S. before taxes is just below $50,000, or about $4,150 per month. The $369 that families spent last month on gas represented 8.9 percent of monthly household income, according to an analysis by Fred Rozell, retail pricing director at Oil Price Information Service. Since 2000, the average is about 5.7 percent. For the year, the figure is 7.9 percent.

Only twice before have Americans spent this much of their income on gas. In 1981, after the last oil crisis, Americans spent 8.8 percent of household income on gas. In July 2008, when oil price spiked, they spent 10.2 percent.

Average hourly earnings, meanwhile, have risen just 1.9 percent in the past year. That's only just enough to keep up with inflation.

The good news is that analysts expect gas to fall to $3.50 a gallon in the coming weeks. In order for household gasoline expenses to return to their historical place in the family budget for the year, gas prices would have to fall by about half and stay that way for the rest of the year.

Demand for gasoline has fallen for eight straight weeks as drivers try to cut back, but higher prices can't keep drivers parked for long. Even with high prices this year, the government expects gasoline demand to grow slightly for the year.

"Drivers try to do what they can, but they have to go almost all the places they go," says David Greene, a researcher at the Center of Transportation Analysis at Oak Ridge National Laboratory and manager of the Department of Energy website "There's no magic gizmo that will drastically change someone's gasoline use."

Mike Siroub clutched his heart as he described the experience of filling up lately. He owns a Union Oil gas station in Arcadia, Calif., but one of his cars is also a 1975 Oldsmobile.

"Think about it," he said. "If you've got a car with a 30-gallon tank and gas is $4 a gallon and you fill it up, you're out $120."

He says high gas prices will keep him home this weekend. And he runs a gas station for a living. As he greeted a steady stream of customers at his station, he laughed and said, "I have to pay for gas just like everyone else."

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  • by BH Location: Here on May 29, 2011 at 05:15 PM
    Oil Companies, Auto Makers, Steele Companies, and Government are all in it together. It will never change.
  • by Anonymous on May 29, 2011 at 09:55 AM
    2012 anybody but obama ,,wake up people
    • reply
      by Anonymous on May 29, 2011 at 07:52 PM in reply to
      A Quitter, a Cross-dresser or a Traitor? you be the judge.
  • by Karen Location: Washington on May 29, 2011 at 05:49 AM
    Anybody thought to blame the enviromentalist who lobby against offshore drilling and drilling here in the US?
    • reply
      by Wolfgang on May 29, 2011 at 06:37 AM in reply to Karen
      Funny Obama said no more lobbist if you elect me as president. Obama could have sold some people an island called Manhattan.
  • by So Sad on May 29, 2011 at 04:57 AM
    In an attempt to rein in run-a-way fuel prices Congress had some 13 chances to support renewable energy, as bill after bill was put forward by Democrats. Republicans blocked them all.
    • reply
      by Anonymous on May 29, 2011 at 08:48 AM in reply to So Sad
      Renewable energy doesn't get grandma to the grocery store, gasoline does. And who stopped all current offshore and all new drilling for our own oil ?? your buddy obama. All the solar, wind, geothermal, hydronic power supplies CAN NOT replace gasoline today nor will it for at least 20 years or more. Research it, experiment with it SURE... but depend on it NOW, YOU'RE CRAZY !!!!!!!!!
      • reply
        by Anonymous on May 29, 2011 at 07:47 PM in reply to
        Its not a replacement,its to supplement our dependence on Oil and gas.
    • reply
      by Just Curious on May 29, 2011 at 09:13 AM in reply to So Sad
      What type of renewable energy? Battery, solar or wind? The technology is not where it has to be for any of them to be viable options.
      • reply
        by Gert on May 29, 2011 at 07:50 PM in reply to Just Curious
        We have got to start somewhere. They told Henry Ford the car would not replace the horse and buggy, but judging by the way the Repugs are supporting the Big Oil companies, we might need those buggies again.
    • reply
      by Anonymous on May 29, 2011 at 11:23 AM in reply to So Sad
      The democratic talking points are getting old we need cheap viable energy to operate our transportation needs.
  • by Boat Owner Location: Greenville on May 29, 2011 at 03:58 AM
    It is obvious that gas prices are high and I doubt it will ever drop below $3.25/gallon. The "gas" that is being sold to us is ethynol. With tis blend, you will notice that your economy has suffered. Fuel mileage is down 5% or more and thus, more fuel is being purchased. Also, the damage to that this ethynol does to engines (older cars, lawnmowers, boats) is not being reported. The American public is being ripped off once again by our government and the news media is not reporting. Just one more attempt to protect the politicians.
  • by Nuff Said on May 29, 2011 at 03:46 AM
    Republicans oppose alternative energy which would drive down gas prices because it would give people more energy choices. More competition leads to lower prices. So Democrats are on the right side of this issue. However, the current attacks by Republicans against Democrats for high gas prices are completely unfounded and highly misleading. There is no equivalence between the two. Only one party wants high gas prices that is the Republicans who refuse to support alternative energy and block regulation that would reign in excessive speculation.
    • reply
      by Obama Snake Oil Co on May 29, 2011 at 05:05 AM in reply to Nuff Said
      Yeah, dream land...last I checked that alternative energy isn't here. Wind and solar is too expensive and your president signed a drilling moritorium on drilling meaning, he owns this problem. Explain why he gave 2 billion in tax payers money to Argentina to drill for oil? You cannnot. Obama owns this problem and it will take him down along with anyone supporting this nonsense...yours too. Within the next 6 months, Obama will make a big announcement about allowing drilling for oil...just watch...its what the DNC does. They lie to people and blame it on everybody but themselves...note the trend? In the meantime, enjoy Obamagas at the pumps....
      • reply
        by Anonymous on May 29, 2011 at 06:43 AM in reply to Obama Snake Oil Co
        President Obama is moving toward the center before the elections and if reelected then the dictator in chief will make massive attempts at liberal initiatives.
    • reply
      by Albert on May 29, 2011 at 05:52 AM in reply to Nuff Said
      Nice spin Nuff Said. Why won't Obama let us drill for our own oil off our own coast? Nuff Said - What you forgot to blame Ex Pres. G.W. Bush. you must stick with the Dem Lib party line or lies?
      • reply
        by Pro alt energy on May 29, 2011 at 08:08 AM in reply to Albert
        Given that world demand for oil is rising so much, the offshore oil we may be able to drill out of the ground would have little impact on gas prices because the oil market is a worldwide exchange. If we just had a U.S. oil market, then yes, it would have a decent impact, but that is simply not the case. As a result, it is hard to see how more offshore drilling would impact gas prices at the pump in any measurable way. Even if world oil consumption was held constant, we could potentially increase global supply by about 2%. An equal drop in price would bring $4.09 gasoline down to $4.00 per gallon. It just does not help solve the real problem.
        • reply
          by Paul on May 29, 2011 at 08:42 AM in reply to Pro alt energy
          You are right Pro alt energy good post. Funny why Obama , Clintons , Pelosi and Dem Lib Media all blamed G W Bush for the 2008 high gas prices.
  • by Anonymous Location: Farmville on May 28, 2011 at 05:28 PM
    Big oil has Obama right where they want their back pocket. Obama could do something about high gas prices if he wanted to.
    • reply
      by Who's Back Pocket? on May 28, 2011 at 06:59 PM in reply to
      House GOP Votes Unanimously to Protect Big Oil Subsidies, well that don't suprise anyone.
      • reply
        by History Student on May 28, 2011 at 08:35 PM in reply to Who's Back Pocket?
        Obama will not let American Oil Companies drill for oil off our own coast. Why? He wants to make his Muslim oil friends countries Very $$$$$ Rich. We need a President who will let us drill for our own oil offshore.
        • reply
          by Anonymous on May 29, 2011 at 04:45 AM in reply to History Student
          When we were drilling in the U.S. fuel prices were still high. Remember the potential collapse of the auto and airline industry, History Student? It has nothing to do with more drilling, their is no shortage, just greed.
  • by Garris Location: Ayden on May 28, 2011 at 12:28 PM
    One way to save on gas,buy your gas in another county other than Pitt Co. One more thing ever thing you use at one time or another has to be trucked. You don't ever hear much on the cost of diesel. When diesel go's up it is slow to come back down.
  • by $6.00 per gallon Location: close on May 28, 2011 at 11:46 AM
    Oil up the bicycle and help solve the problem of obesity and high gas prices. feel better too with some good, practical, aerobic exercise.
    • reply
      by 200 miles a month on May 28, 2011 at 12:19 PM in reply to $6.00 per gallon
      Yep, you can bring home a weeks worth of groceries and a 50 pound bag of dog food this way. NOT! There are times you have to drive.
    • reply
      by 87 cents a gallon on May 28, 2011 at 01:14 PM in reply to $6.00 per gallon
      Everybody dont live in your liberal utopian city.
  • by Chuck Location: Greenville on May 28, 2011 at 11:33 AM
    Buy gas at stations that you can get a discount by using your Loyalty card. Not naming any stations ,but my card "Gets Me .03 Per Gallon off my gas purchase. Not much on 20 gallons,but every little bit helps. 20 Gallons a week X .03 per gallon =.60 per week savings = $31.20 per year. "Do Not support gas sellers who do not offer loyalty cards". It is your money.Spend it like you wish. Stations who do not give uou the .03 per gallon are ripping you off!!!
    • reply
      by LOL on May 28, 2011 at 01:26 PM in reply to Chuck
      Hey Chuck, whats the name of YOUR gas station? Will you give me a loyalty card?
      • reply
        by Chuck on May 28, 2011 at 10:55 PM in reply to LOL
        Sheets. Nice stations too.Ask for sheets card.Good for .03 per gallon on gas Discounts on other stuff in store.Gas is competive with out card,but you save .03 per gallon when using loyalty card.Every bit helps .
    • reply
      by Toni on May 29, 2011 at 09:07 AM in reply to Chuck
      At the shell stations(Duck Thru) in my area if you pay with cash you get 0.05 off gas....When I am around those areas and have cash thats where I fill up at, as long as they are around the same price as everyone else.
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