Tag Archives: economy

Are Gas Prices Impacting Shopping Behavior?

Rapidly increasing gas prices have gas stations scrambling to keep up. This one in Great Falls, VA ran out of the # 4 when gas surpassed $4 per gallon.

Shoppers Are Turning to Cost2Drive in Increasing Numbers

This morning my wife wanted to purchase tickets to an upcoming show at the Kennedy Center.  She decided to order the tickets online to save time and the fuel costs associated with driving into Washington, DC to buy the tickets in person, but was stunned by the huge service fee of $32 for ordering them online.  All of a sudden the trade off in convenience didn’t seem worth the extra expense, but there was still the fuel cost to consider.

Fortunately she had downloaded the  Cost2Drive iPhone app and  within seconds was able to determine that the trip into DC would cost her a mere $3.85, less than $8 round trip, and so she opted to drive to the Kennedy Center to pick up the tickets  thereby saving $24 off the cost of the total ticket purchase.

With a swipe of her finger, my wife could also have quickly compared the costs of driving each of our cars into DC.

As she related this story  I thought about the millions of scenarios that occur each day throughout the US that involve similar types of cost-benefit analyses tied to driving costs and gas prices.

Some examples include:

  • Is it cheaper to drive to the outlets or shop nearby?
  • How good is that daily deal I’m considering once I factor in driving costs?
  • What’s it going to cost me to run back to the grocery store for that one item I forgot?

I decided to investigate if others were using Cost2Drive in this manner by searching through over 200,000 trips entered on our popular trip cost calculator in March to see if any had shopping malls entered as the trip destination.  Several hundred did with the Mall of America in Bloomington, MN as the most popular followed by The Florida Mall in Orlando and the King of Prussia Mall in Pennsylvania.

The average trip distance for these routes was slightly over 300 miles, which is much shorter than the 800-mile average distance for all routes entered on Cost2Drive.com.  When the Mall of America, which is a travel destination in itself, is removed from the results the average distance drops to 230 miles with many routes being entered in the 10-20 mile range indicating that shoppers are indeed concerned about driving costs, even for nearby shopping trips.

Are high gas prices impacting your daily shopping habits? Share your experiences below.

Atlas Hurled

Something Unsettling as Gas Prices Reach Historic Highs

Earlier this year a new movie version of the famous Ayn Rand novel Atlas Shrugged was released that depicted the US economy in a disastrous state by 2016 with gas prices at $34 per gallon.  This no doubt unsettled the car owners in the audience who were already being pummeled by soaring gas prices for the second time in 3 years, and as unlikely as the above  nightmarish scenario is, there’s no question that the persistence of +$3 gas prices is taking a serious toll on the constitution of consumers.

This became more evident last week with the release of a research report from the New America Foundation titled The Price-Induced Energy Trap.  The report argues that consumers are in an “energy trap” because their ability to effectively respond to rising gas prices is limited and highly dependent on income levels, with the middle and lower income groups suffering the most.  As a result, many of the desired outcomes of a policy-by-price approach (such as increased purchases of hybrids and other fuel efficient vehicles) are never realized because the neediest people cannot afford them, creating a paradox that defies traditional supply and demand elasticity curves.

Middle & Lower Income Groups Most Affected Source: New America

Putting mind-numbing economics lingo aside, the real story here is that as  temperatures have fallen across much of the nation gas prices have not, at least not to the levels we’ve come to expect with autumn setting in.  In fact, as reported by AAA and later picked up by the LA Times, gas prices are at historic highs for this time of year and 22.6% higher than the previous record.

In fact gas prices are rising much faster than incomes, so its hard not to feel a little queasy these days when glancing at the gas gauge and seeing it drop below a quarter tank.  This likely explains why earlier this year AAA reported an upsurge in the number of stranded drivers due to vehicles that had run out of gas.  Apparently many people were stretching out the intervals between refueling in the delusional hope gas prices would decline, a somewhat disturbing change in behavior that reflects the impact high gas prices have on people.

I’ll relate another rather disturbing episode I encountered this past spring on a trip from New York to DC.  It was late at night, well after midnight, and I had stopped at a rest stop in Maryland to grab some coffee to keep me awake for the remainder of my journey (thank goodness Starbucks was open).  As I left my vehicle I heard a woman’s voice call out to me, something about gas and getting home.  I warily looked over and saw a woman of middle age waving me over from the front seat of what looked to be a 20-year-old Jeep Cherokee.

As I approached her she started waiving her wallet out the window.  Did she want to show me her ID?  Then I realized she was showing me her wallet was empty, and she explained that she needed money to buy enough gas to take her the 32 miles to her home.  I handed the woman a few dollars, and then after thinking about it handed her a few more (unfortunately our Cost2drive iPhone app hadn’t launched yet or I could have given her the exact amount).

Something about the whole scene was upsetting. The woman didn’t look indigent, she could have been my mother and I doubt that she’s accustomed to begging for money.  It made me recall some of the scenes from Atlas Shrugged, and as I got back in my car to head back to DC I started to feel a little nauseous.