Gas Prices, Interest Rates, and the Things We Find Intolerable

In the lull between news stories about Charlie Sheen, the devastating tsunami in Japan, and now the war in Libya, the media occasionally likes to remind us that gas prices are on the rise. As if we didn’t already notice when we filled our cars, or paid more for groceries.

Naturally, there is justifiable frustration, even downright anger, over these higher gas prices. We don’t just feel the increase at the pump, but we feel it as the increased costs to transport virtually every consumable product are passed on to consumers.

Some argue higher gas prices are a good thing – that they force us to consume less and seek out “alternative energies” that we might not turn to otherwise. Putting the politically-charged arguments aside for now, one thing I find interesting is the things we are willing to, and not willing to, tolerate in our society.

According to the AAA Daily Fuel Guage Report, at the time of this writing the average cost of regular unleaded is $3.55 a gallon. One year ago it was $2.82 a gallon. That’s a 25% increase in the cost to fill your car’s tank over last year’s prices.

Then I read this from a study on store credit cards published the end of last year:

Among the 35 store cards surveyed, the average store credit card rate is 23.83%.

I recognize not everyone signing up for a store card pays interest, but many do, and for them it is acceptable for a store card to take 25% more of their money in the form of tacked-on interest. I wonder how many people screaming about high gas prices also pay considerable amounts of interest to credit card companies and retail stores?

Some use this opportunity to point out that if you are living so close to the edge that a 25% increase in gas prices sends you over, then you are failing at personal finance.

Well, that may be, but the fact is there are a lot of people just that close to the edge. Some are there because they made bad decisions: bought too much house, or too much car, or too many goodies. But many are there because of bad circumstances: layoffs, illnesses, etc. Yes, bad things happen to good people.

Those good people may already be living frugally, and they may have already cut all frivolous expenses from their budget. They are struggling to keep their heads above water as the water levels continue to rise. So for these folks, higher gas and food prices are not a good thing.

This all leads me back to my idea of a serentity prayer for finances. I cannot single-handedly control the price of gas. I can control the amount of interest I pay. I can complain about both, but complaining about something over which I have little control seems futile. I need the wisdom to know the difference.

Instead, I can focus my energy on managing my household’s finances so that I don’t have to borrow money and pay those interest rates. I can focus my energy on inspiring others to take the same approach.


  1. We live in the country as well, 8 miles outside our small city and 45 miles from the big city. We don’t just run to town for milk anymore. We bought a small $500 car that gets twice the gas mileage of everything else we have and drive it as much as possible.
    I was appalled to find that the pack of sliced cheese I have bought for years for $3.19 went up to $4.69 overnight.
    The Struggle with the Juggle-WAHMs

    • I mentioned this on the Facebook page the other night. The store-brand 64oz. apple juice we buy the kids used to be on sale for $1.49 (regular price $1.99). We had not bought any in a few months because we stocked up last time.

      This weekend the same size juice was $2.49 on sale – that’s a 67% increase in the sale price.

    • Re: cheese price…. and the price paid to the farmer for the milk to make the cheese has NOT gone up…. it’s all the transportation, packaging, etc…

  2. There is definitely a lot of financial strain being placed on everything we purchase and/or interact with these days. Sometimes, it seems that the solutions are just buy less, sell more and conserve stronger than ever.

    Farming is also starting to look like a culpable option.

    • Gardening might be what you mean instead of farming??
      Farmers are buying retail (gas, fuel, seed, feed, supplies, etc) and selling wholesale with none or very little control over what they sell their product for!

  3. We live about 30 miles from everywhere (work, school, shopping), and a trip to town currently costs us about $12. Combine that with the jump in the prices of food and clothing, we are really feeling the pinch.

    The media shares its “helpful” tips for saving on gas: Carpool (impossible to do when your neighbors are retired on a fixed income and you have to get to work), take the bus (no mass transit here) or ride a bike (60 miles a day? Doubtful.)

    It is really frustrating to have worked so hard to dig out of debt and to save up our money, and then, through no fault of our own, lose a chunk of our disposable income. We are doing everything we know how to reduce our trips to town and to save money. I just don’t know how much further I can tighten the belt.

    • Agree totally with the “Helpful media” and the tips for saving gas remarks… obviously media is NOT rural 🙂 My only option left for saving gas is cutting out the commute to work…. ie, quit working! lol! 10% of my daily take home pay is now going to paying for the gas for the trip to work!

  4. Jason
    Great article. I agree with you that complaining about the price of gas is a waste of breath – there’s not much you can do about the price specifically, but you can mitigate your dependence on it by making other life choices – such as working from home, taking public transit. I know these options are not available to all, and may not be the easiest routes at first (a home may need to be sold) but you’ll make it up in the end when others are paying higher gas prices and you’re riding a bike to work during the summer. Short of moving closer to work, your only other option is to make your own fuel, which is not for everyone either.
    In short, I don’t think people can control gas prices but they can react differently – they chose to live where they did and chose the commute they have when they signed a mortgage contract or a house rental agreement, and they reinforced that choice when they signed their contract with their employer.

  5. I bought a condo in an urban area and sold my car, so I could control my auto expenses – then my condo fee and property tax went up 25% over a period of 3 years. You can’t win! I think life inevitably gets more expensive faster than my income will ever go up.

  6. Great article, Jason.

    I happen to fall into the camp that thinks people can and do get a little creative with managing expenses when faced with rising prices (no matter the root cause). For example, I have to wonder how many people have taken up gardening to augment their food, how many people are riding the bus if they can, how many have learned to sew or cook, and how many people are actually carpooling. I’d also be curious to see if we’ll begin to see changes in HOA rules that encourage alternative energy sources (for those of use in condos or HOAs) like being able to put solar panels on the roof.

    Frankly, I’m a little bit excited to see what inventions come out of these constraints, to see the full power of the human mind and energy put to good use.

  7. Food prices are up and I have adjusted our menus, but what can I do about gas? I drive as little as possible, I fill up every 2 weeks. I know it will go up more before it goes down. It will affect food prices as well.

  8. As always, great article.

    Sure, moving closer to transit and riding a bike would work….for single people without children who work close to bus stops or train stations. It is not all black and white and the options don’t work for everyone. Most, actually.

    For the rest of us, it’s just another gap to fill with money that should pay something else. Not all of us have credit debt, unnecessary bills, or poor spending habits.

  9. One thing I am puzzled about is the fact that no one has suggested dropping the speed limit back down to 55 MPH. This is the simplest solution I know of that will literally put the law of supply and demand into action. The lower speed limit will save gas and thus create more supply, thus dropping prices back down.

    • LOL, yeah, I’d LOVE to see the 55 mph law back in action in California, where I live. Not gonna happen. And if you *do* drive 55 on the freeway, you’ll cause an accident by driving under the current speed limit. That, or get involved in a road rage incident with other drivers.

      There are other driving habits that can improve gas mileage, also, but you can’t regulate bad driver habits.

    • That is funny that you mention this. The Texas legislature is working on raising the speed limit to 85. I am all for it too. Texas is huge compared to most other states. For instance I live near Austin, which is pretty close to the middle. It is close to 600 miles to get to El Paso and the west border. To put this in perspective it is just under 1300 miles to San Diego, CA from Austin, TX. Raising the speed limit from 70 to 85 could save than an hour. So I guess it boils down to what is more important to you; time or money. You can’t make more time.

  10. I have no choice on how much I drive, so I just have to live with it unfortunately. However, we did recently buy a new car, and gas mileage played a huge part of the decision process.

  11. Jason – complaining about the price of gas is a bit like complaining about the weather – not much most of us can do except move to another place – where the weather is better and we drive less, however what is frustrating to me is that the CPI is calculated excluding food and fuel – because they are volatile. So what does that do – it suppresses wage increases and, for those on fixed income, SS increases. So we have the double whammy of CPI being manipulated to support a policy – QEII by the Fed – which is leading to higher fuel and food prices – even before the Libya and rest of the Middle East went up in flames. So don’t complain about the price of gas, but do complain to your elected officials to change policies like support for QEII and basing the CPI on a formula only a PHD can understand while ignoring the basis necessities most of us have to deal with to feed our families and drive to work.

    Bill Liebler

  12. Good post. Very thought provoking. I have been frugal for decades but recently have looked into new ways (for us) to combat the ever rising costs. When our son-in-law bought a new car we purchased his hybrid Civic from him to hopefully help keep gas costs in line. I also just bought a 25 lb. bag of vital wheat gluten to make my own meat substitute to help with food costs. I am also couponing, rebating and looking at sales for gifts, our needs and charity donations more than ever before. Yesterday, also, I was researching the food pyramid and serving sizes as a way to keep food costs down by not over serving certain things. Who knows, I may finally lose that last 10 pounds!

  13. I drove out to my mother’s (1200 miles) when gas was at 3.20. It will be 3.55 when I go back. There has been NO restriction of gas from foreign conflicts or Japan (we do not get one drop of oil from Lybia). Why are the people not out protseting in the streets over the price increases caused mearlty by speculation? The government could open the gas reserves- but there is NO shortage!
    This is crazy that we simply accept this!
    The impact will be no vacations this summer for us—which will hurt another sector of the economy.
    When I get home- 20 miles from town- I will hunker down to growing our garden and enjoying life on the farm. Then I will turn on the news and just watch the rest of the country panic when they cannot go to Disneyland.

  14. Great article as always.

    I too have had to be frugal all my life, but still found myself in serious debt for most of it. Not trips to Hawaii or expensive cars but just under earning and medical bills. We could never get any help as we made just over the poverty line for our family size and there was no place to cut back. We never had cable or the fun stuff so our solution is just to work harder. Guess what? My husband commutes 100 miles a day on a State salary that will likely be cut, even though we have not had a raise in over ten years. Has any thing gone up in the last ten years? Hmmmm….. let me think. Our solution work harder. In this country we have opportunities to get out but they all involve work. When there is no place to cut back or do with less you just have to work more.

    • Unfortunately, the opportunity to “work more” does not always exist. We know many folks who would be thrilled to have a second or third job. We also know people who can no longer get ANY job.

      The bottom line in this country: Even if you reign in your expenses, the cost of just about everything is increasing while people are not getting raises, losing jobs and being forced to take pay cuts. all the while, many companies continue to pay out outrageous salaries and bonuses to top execs.

      More and more “regular” folks, who do not take vacations, don’t have expensive electronic “toys” and don’t eat out, are scrambling to just make basic expenses. They don’t have the option to move, work from home (if they can even get work) or take on more work. Some of these people have health issues and cannot even afford the most basic care (For those of you who say, go to clinics: Guess what, even if they exist, you still have to pay for the many, many many tests needed for a diagnosis in many cases. Fees people simply do not have. Heck, people working WITH insurance can’t afford healthcare.)

      This country is in bad shape, getting worse and nobody is doing very much in terms of affordable housing, creating jobs or allowing the people who do the real work to benefit from it. Meanwhile, people over 50 are finding themselves obsolete in the workforce even while being told (or already knowing) that they need to work until they drop.

      For a country filled with so many smart people, it seems the greedy and the useless (the government) dominate with little regard. In the real world, it’s our fellow strugglers who try to help each other, and some churches.

      People need to demand more from our local and federal government (I live in a major city where the mayor, now in term three!, ran on getting jobs. His track record: More jobs lost and fewer jobs into the city during his tenure. But he thinks he’s a big success. Meanwhile, working people can barely afford public transportation and housing anymore.

  15. I know it’s not the point of the article, but I invest in oil and gas companies to hedge against the cost of fuel.
    Specifically, I have invested in Crescent Point Energy. Granted the price of that stock has gone up ~15% since I purchased (increase in oil price), but pays a monthly dividend that subsidizes my fuel consumption.
    If you can’t beat ’em, join ’em!

    • So you use the monthly dividend to offset the increased cost of fuel…that is brilliant! Wonder how we could carry out that same strategy?

      If the costs of consumer staples increases, consider a position in P&G. McDonalds goes up on their dollar menu again, buy MCD. OK, that’s probably a bad example as you should probably avoid MCD, save the occasional treat.

      • Jason,
        You’re on the right track. And, as the company makes more money, you will see capital gains and with the stocks you mentioned, also dividend increases.
        It’s rarely a 1:1 trade off, but at least you’re not falling further behind.
        Think JNJ, KO, PEP, P&G, CLX, KMB for consumer goods.

        For your MCD example, you could also look at YUM.

        It also works with your utility and cable companies as well. DUK, VZ, T etc.
        Look for strong companies with a long history of increasing dividends.

        If you rent your home, you could also play REITs to hedge against increasing housing costs. For example, if you ,live near DC check out WRE etc.

        • I like YUM, but oddly enough am intrigued by MCDs real estate holdings. Even as they move towards franchising, I’ve read where they will retain ownership of the building and the land. Those restaurants have been sitting on good commercial real estate locations for a long, long time, and to me, that adds long-term value.

          Now you’ve really go me thinking…how much would I have to invest in Verizon for the dividend to pay for my monthly cell service. The answer: a lot! But it is definitely an interesting strategy.

          • MCD is a great Real Estate play. I think only the Catholic Church owns more RE worldwide than MCD.

            With respect ot having the investment pay your monthly bill, you can get there over time. The key is to have annual dividend increases that are great (on a % basis) than the increase in the service you pay for.

            An example would be a bank where the annual dividend increase might average 10-15%/year but your mortgage payment stays the same. The dividend “pays” more of that mortgage payment each year without any additional investment by you.

  16. Interesting article and discussions. I spend a lot of time on my site talking about fuel efficiency and the current state of oil prices.

    As someone else mentioned, you see the usual recommendations for improving efficiency – properly inflated tires, carpooling, combining trips, avoiding jackrabbit starts, etc.

    But one common sense tip that seems to get missed is that we can control how fast we drive. Most cars achieve optimal efficiency in the 50-60 mph range.

    Take a typical 25 mpg car, and assume $4 per gallon gas. Using a 44 mile round trip commute taken 240 days per year as a basis, you can save almost $530 a year by driving 65 mph instead of 75 mph! Savings would be even more for cars getting worse mpg.

    That is an optimistic number assuming clear traffic your entire commute. Many of us have little choice when caught up in stop and go traffic, but when you have clear traffic, try to stay as close to that 50 to 60 mph as conditions (and laws) warrant.

    • There are some parts of the country where 55mph will darn near get you run over! I learned to drive in Atlanta as a teen, and the speed limit on the open interstate in surrounding areas was 65mph. If you drove 60, you better be in the far right lane and look twice before moving over. I remember thinking, “Why is everyone in such a hurry?!”.

      A video was produced by some college students a couple years ago that demonstrated this. They simply drove 55mph (speed limit in this particular location) and the roadblock that ensued actually became a public safety issue. Unfortunately, I can’t find the video online.

      I do agree driving slower has probably the biggest impact on fuel economy.

  17. Living on Social Security (which hasn’t had a cost-of-living raise for two years)we have a few strategies for coping when gas prices go up. One is to enjoy at least two Stay at Home Days per week where we subsist on food in the kitchen and entertainment in the house. It’s a nice break that helps us resist spending temptation while saving gas. We also try to shop in our own town and make a point of accomplishing more than one task if we must make a trip to the nearest shopping center. Spending locally has the added bonus of investing our sales tax dollars in our own community. And we turn off our ignition at railroad tracks, long stoplights, drive-thrus and when waiting for someone. Every little bit helps.

  18. I had to laugh at the idea of driving 55 mph on the freeway. The speed limit is 65 – 70 here (Atlanta suburbs) and you will have an 18 wheeler riding your bumper while you are doing 75. Most people drive 80 – and I am FREQUENTLY left in the dust with my cruise control set on 75 – 78.

    I remember reading a Readers Digest article a couple of years back about bad cities to drive in. They had checked average speed on I-285 (the ring around Atlanta) and found it to be 83 mph.

    You would seriously be taking your life in your hands!

  19. For a scary movie night watch the documentary “The end of Suburbia”, about peak oil. It is online if you google it. I drive 100 miles to work and back but only 2 times a week.

  20. I think the key is one word in your reply….”Consumer”….. the more each individual can do to be a Producer, instead of a Consumer, the better off that individual will be financially 🙂
    Meaning to grow or sew instead of buy. To make or find an alternative instead of spend… To do without “wants” and stick more closely to needs….

    Usually Consuming is tied to buying, in this sense we are talking about…
    and producing with NOT having to buy.

  21. A good article indeed. I agree too that everything is going up except for wages. The best thing to do is review your weekly or monthly consumption and try to lower the costs of intakes. Instead of using your car when going to work try walking if you only live near your office. Instead of doing the grocery weekly why not try 2x a month it will help you save on transportation.

    “We help Americans find jobs, prosperity and explore Asia. For details, visit

  22. Gas prices, over the last 20 years, have gone up faster than the inflation rate. Much like college tuition. It’s frustrating, but we can’t control these prices. Rather, we have to react accordingly.

    I’m beginning to realize that this further speaks to the need to maximize the gap between income minus expenses, and focus on needs first. Living with one’s means this way, and saving as much as possible, really helps with these price shocks. The reality just might be that these surges in price could continue. Best to plan that way