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How Would $4 Gas Affect Your Budget?

By JLP | April 27, 2007

I was talking with my wife about how some people are predicting gasoline to go to $4 per gallon. She said, “Wow. That would cause us to make changes to our budget. Something would have to be cut.”

She’s right. My wife drives a lot of miles and according to my calculator, gas at $4 would cost us an additional $2,000 per year (based on the current price of $2.72). We would have to make adjustments to our budget in order for to afford the higher price. We would most likely have to cut our eating out budget or quit contributing to our 401(k) (I’M TEASING!).

Anyway, I thought it would be interesting to hear from you.

Would gas at $4 per gallon affect your budget? If so, how?

Topics: Budgeting, Calculators | 24 Comments »


24 Responses to “How Would $4 Gas Affect Your Budget?”

  1. Steve Says:
    April 27th, 2007 at 6:33 pm

    We currently pay about $3.40/gal for regular, and both live within 15 miles of work. So it would be an extra, like, $400/yr… so no, not that big a deal.

  2. crsandus Says:
    April 27th, 2007 at 7:11 pm

    I live about ~1 mile from work and 2-3 miles from 3 major grocery stores. Anyway, my budget wouldn’t be affected, I’d just complain a lot.

  3. Foobarista Says:
    April 27th, 2007 at 7:29 pm

    For us, very little, especially since gas in our area is already $3.50. I do lots of work from home, and during the last gas-price runup, we figured the break-even point for me to ride the nearby train to work is about $6/gal. We do ride the train to lots of places already, particularly when we visit San Francisco, where parking is awful but the trains and busses are generally good.

    Budget-wise, a run up to $4/gal is a change of about 0.15% of our annual income, so it wouldn’t hurt us much – although I’d whine a lot too…

  4. db Says:
    April 28th, 2007 at 3:33 am

    It would affect me very little, since I’ve organized my life such that I only need to buy a tank of gas (12 gallons) about once every 4-6 weeks. I take public transportation to work, so really do very little driving (the train stop is a 2 mile round trip drive). I really only drive to the train stop, or to run local errands.

    I don’t really “budget” for gas — I just factor in the cost of gas and my montly bus pass into my “spending money” category.

    DB

  5. Bill Chen Says:
    April 28th, 2007 at 8:00 am

    America is a big country and hence cars can be considered essential. Moreover, she does not have public transportation system build into every neighborhood. I can count myself lucky since I live in Singapore and our government has taken the initiative to build an efficient public transport system since we are just a small red dot on the world map. For us, buying a car in Singapore is expensive and not necessary.

    Bill Chen
    http://www.lionsault.com

  6. wylie Says:
    April 28th, 2007 at 5:08 pm

    I drive a hybrid and both my brothers also have hybrids. I have the Honda Civic and they each have a Toyota Prius.

    So we all get good mileage. More importantly, we all live well below our means so we would be fine.

    Wylie

    http://www.wyliemoney.com

  7. Andy Says:
    April 28th, 2007 at 6:11 pm

    Gas is already about $3.50 so it’s not much of a change. Also, I bicycle every day, so I only use my car when going shopping for things. So maybe I drive ~20 miles/week regularly. Most of my gas is used on trips.

  8. thc Says:
    April 28th, 2007 at 9:21 pm

    Bay Area gas is already about $3.50 and we only burn about 75 gallons a month. So, 38 bucks, we’d never miss it. Would I be pissed off about 4 bucks a gallon, you bet!

  9. PFigg Says:
    April 29th, 2007 at 1:59 pm

    $4 gas would only add about $25 to our monthly cost of gas…for now. A military move in the near future is going to mean a longer daily commute, so it would probably end up being double that about two months from now.

  10. Mighty Bargain Hunter » Roundup for week of 22 April 2007 Says:
    April 29th, 2007 at 3:24 pm

    […] All Financial Matters wonders how $4 gas would affect people’s budgets. […]

  11. moom Says:
    April 29th, 2007 at 6:58 pm

    No, because I don’t have a car. HIgher oil prices obviously might raise the price of goods in general, but I spend so little relative to income it’d have little effect.

  12. fivecentnickel.com Says:
    April 29th, 2007 at 8:47 pm

    You could also drive less. ;)

  13. Sam Says:
    April 29th, 2007 at 9:23 pm

    It won’t be much of a burden on me. I fill up about twice a month and was paying about $25 each fill up. More recently with gas near $3/gallon here in Salt Lake, the cost of a fill up is closer to $35.

    My wife and I carpool to work about 3 times a week, about 6 miles each way. Both our cars get pretty good mileage. If the price of gas gets too high, I’ll talk my boss into letting me telecommute one day a week. All in all, not a big deal for me. The main downside of high gas prices for me are watching the inevitable news reports interviewing motorists filling up their gas tanks and whining for the camera.

  14. JOhn BoB Says:
    April 30th, 2007 at 7:53 am

    I’m so tired of all the holier-than-thous who ride their bikes and take their public transportation so THEY don’t need gas for their eeviil cars.

    Where I live, public transportation is not only all but non-existant, its use is relegated to the scariest bunch of miscreants I have ever seen!

    I would be happy to ride a bike to work, but when it’s already 100 degrees at 9am (which it often is) I would arrive at work stinky and covered in sweat.
    Carpools, sure, but when I need to work past 5:00 (2-4 days a week) will they wait for me?

    $10.00 per gallon? Bring it on. I don’t have any other options.

  15. Jim Says:
    April 30th, 2007 at 7:58 am

    I actually believe higher gas prices would be a good thing. Other countries already have higher gas prices resulting in far different travel habits. We need to change the way we live and higher prices would force the issue. As it stands, there are never enough roads and there are never enough lanes and 98% of the cars have only one person.

  16. Miguel Says:
    April 30th, 2007 at 8:14 am

    I live in NYC, take public transportation to work, do not own a car, and rent cars only for local errands, so $4 gas would barely register in our household budget…. sorry JOhn BoB.

  17. CK Says:
    April 30th, 2007 at 8:37 am

    #14 Except for the heat, JOhnBob just described Portland, OR and environs. Miscreants? Nail on the head, My Brother. This is even the town where a transit bus driver let a passenger off so that he could beat up a bike rider!

    I asked my employer for a company gas card in lieu of a COLA raise that would be non-taxable to me and with no payroll taxes for him. He surprised me by giving me both! My company just moved to new digs that increased my daily one-way commute from 18 miles to 30 miles, so the gas card was a blessing that came at just the right time. A fill-up for my wife’s Mazda6 has now exceeded $50 at $3.11 per gallon, but with the gas card I don’t even get to complain.

  18. JLP Says:
    April 30th, 2007 at 8:56 am

    John Bob,

    I don’t think a person who used public transportation is a holier-than-thou. When my wife and I visited Washington DC, we used public transportation nearly the entire time. It’s fairly easy to do as long as you stay in the city. It’s living in the suburbs that really hurts.

  19. skTheTwo Says:
    April 30th, 2007 at 9:33 am

    The prospect annoyed me enough to put some math skills at work – an analysis of the Nymex spot price for gasoline and the retail price showed there was a connection, with a time lag of course; but predictable enough for me to create a 3 day “gas cast”. I update it daily at my website. it tells you which day in the next 3 is the best day to buy gas. On average it saves you 2 cents/ gallon.

    O yeah, its on my homepage.

    -SK

  20. Cheryl Says:
    April 30th, 2007 at 10:32 am

    $4 a gallon would have an effect on my budget, about $676 a year total difference! I would have to rework the numbers to allow for that kind of an increase. I commute about 40 miles roundtrip, fill up once a week…and am very careful about planning errands to and from work so as not to use extra gas.

  21. Q Says:
    April 30th, 2007 at 10:45 am

    We have a lakehouse that’s a 70-mile round trip. Frankly, we haven’t been finding alot of time to get out there anyway, but I would hate to think that $4 gas would keep me from going out there.

    Luckily, my wife works two days a week, and I live 1.5 miles from work. So our gas consumption should be lower than the average American.

    I hereby pledge that if we see $4 gas, I am riding my bike or walking to work every day!

  22. Chris Says:
    April 30th, 2007 at 10:57 am

    It would definitely have an impact on my budget. But not a significant one. I commute by motorcycle and get around 70mpg. But I do notice when my weekly tank takes $5 to fill up instead of $3.

    There are other price increases that would result in higher gas though, such as restaurants that depend on regular truck deliveries. All those costs will be passed down to us.

    Wasn’t it the last major gas hike that Pizza Hut started adding a $1.25 charge for delivery? I never got that, since the delivery guy is the one buying his own gas anyway…but it does point out that some industries will start charging extra just because they can, and once their prices go up they will be reluctant to lower them, or will lower them only slightly once gas prices drop again. The long-term cost of goods and services would be impacted, I think.

  23. Khyron Says:
    May 1st, 2007 at 4:45 am

    My budget is already calculated to support $8/gallon gasoline. That would allow me to do the minimum amount of commuting – from home to work and maybe some lighter travel. I live in the Washington, DC metro area so I could use public transportation more when I go downtown. The job is 10 minutes away by car. The real problem is my RE investing which is mostly in Baltimore, a little hike up I-95. But I’m going to stress test my budget for $10/gallon soon. I like to be prepared. My gas budget is calculated based upon my last daily commute when I lived in California (80 miles each way from Orange County, through L.A. to the edge of L.A. and Ventura Counties).

  24. Alex Says:
    July 21st, 2007 at 3:26 pm

    I’m paying around $3 a gallon but starting to realize the cost that is being rolled into goods and services. I’m having to adjust my budget to prepare for that impact as well.

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