Thursday, October 13, 2005

Pulling number out of their...

Warbs Co-Blogger Wilson had this little blurb up today:
A report was released yesterday (where is it? no idea) that says anyone with less than a 3.7% raise in salary last year essentially is making less money because of the increase in gas prices. How much gas are people buying? I guess I am in the dark. I have pretty much always worked from a home office, so I fill up the tank about twice a month. How often do normal people have to get gas?
Yeah, I'm'na call bullshit on that number.

The "average" person in America drives 12,000 miles a year, and gets 24-26 miles per gallon.

So the "average" person is buying something like 460-500 gallons a year.

Of course that "average" includes folks like Wilson, who buy maybe half that; and my grandmother who buys about 16 gallons a month. I generally drive more, and I only average 22mpg, so I buy about 900 gallons year.

Anecdotally, the average person who commutes to work fills up about once a week, after using about 3/4 of their tank. This is pretty consistent across vehicle types, but in a lot of areas commute times and distances are getting longer so that may be changing.

The average fuel capacity for passenger vehicles in America is 14 gallons, so given behavioral trends you can guess that the average commuter is buying about 12 gallons of gas a week, or about 600 gallons a year.

Of course if you're driving a hummer with 15mpg hwy, and a 30 gallon fuel tank, you're probably filling up about as often, it just costs you twice as much. But much as the leftists of this world would like to have us believe, not everyone drives hummers.


Given the $1 average price per gallon differential over the last year, at 600 gallons of gas, that's about $600 more this year. In order for that to be the equivalent of offsetting a 3.7% raise, the individual in question would have to make about $16k a year.

Considering per capita household income in the U.S. is $42k, and personal per-capita income is I just under $25k this year, that analysis doesnt fly.

OK, maybe they're including inflation?

Inflation 2004-2005 was 2.7%, so for $600 price increase to amount to 1% of income, you would need to make $60,000 a year.

Maybe they are including the estimated effect of gas prices on the consumer price index (CPI)?

Well, according to best estimates, that's about .5% of real consumer price increases EXCLUDING GASOLINE (so far anyway). Of course since the average American household is currently spending more than 100% of their income annually (estimates vary based on interst rates etc...) that's a fair bit of direct impact.

The real percentage of income offset by the increase in gas prices looks like about 2-3% even taking into account all of that.

Somehow I don't think their 3.7% number has any basis in fact.

Funny coincidence though, the average year over year raise in the U.S. ?

About 4%

I wonder if that might have anything to do with how they came up with that number?