
Gas Price in Milwaukee 3/10/2011
No, this isn’t an article about about the Subway lunch special, it’s about the price of gasoline. The price of a gallon of gas is fast approaching $4, and recently experts have predict that a gallon of gas will go as high as $5 in 2012. A range of factors have shocked the oil markets in recent years, be it speculators, war, hurricanes, peak oil, big oil, terrorists, revolution, QE1 or QE2, or simply supply and demand, but it is not the reason that is important to the individual filling up his tank. It is the trend that matters, and that trend shows that the price is on the rise.
So the question that must be asked is how will the rise in price impact an individual’s bottom line and how can they control their exposure to this trend? Clearly the more one drives the greater the impact, so a solution is to live where using driving isn’t needed just to buy a soda.
Take my girlfriend and me for example. While the average U.S. citizen drives about 12,000 miles a year, we only drive a total of 3,000 miles per year. Using an estimate of 22.4 mpg as how much gas a typical car uses per gallon and $3.53 (the price has risen since the photo was taken) as the average price for a gallon of gas in Milwaukee we spend about $3,700 less each year than a typical American couple. If gas were to rise to $5 per gallon that difference will rise to $4,700 each year. Of course not everyone can drop from 24,000 miles to 3,000 miles a year, but by living in a walkable neighborhood that has jobs and services close to housing the need to drive is dramatically reduced and the impact to the budget is minimized.
Certainly, there are other costs that can be higher or lower depending on where someone lives, and how big they live, but living in certain locations is sure to cost more at the pump. Choosing to live in a built environment that allows people to get around without the requirement of an automobile allows people to avoid fluctuations in cost and have a fixed budget that is not susceptible to the whims of the oil market.