The Tax on Consumers of Higher Gas Prices

We want to re-post our gas price sensitivity matrix, which illustrates how various prices will impact individual consumers given their average miles driven per day.  We had to make an assumption on the automobile’s gas mileage so we took the national average calculated by the Department of Transportation, which is 17.4 mpg.   We also used an average price of $2.50 per gallon for 2010.

If gas prices were to average $3.75 per gallon in 2011, for example,  a person who drives on average 60 miles per day (21, 6oo annual) will spend and additional $1,551.72 on gasoline during the year.  This is more than the GDP per capita of 30% of the countries  monitored by the IMF and 130 percent of India’s 2010 GDP per capita.    Needless to say, that is some pretty big cheese, especially if there are two commuters in a family.   (click matrix for better resolution and clarity)

(click here if matrix is not observable)

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11 Responses to The Tax on Consumers of Higher Gas Prices

  1. sextisfaction says:

    In future, people will have to work and shop nearby where they live or they have to rely more on public transportation of things don’t change

  2. John L says:

    curious if the DOE is all vehicles (e.g, freight trucks included). I did a similar study (http://www.zerohedge.com/article/impact-surging-oil-prices-us-consumer-primer) and found averages from 17 to 23 (so I went with an average of 20). Either way, you’re right – it’s big.

  3. macromon says:

    Your assumption may be closer to reality, John. I think the Cash for Clunkers program upgraded the national fleet a bit.

  4. macromon says:

    That graphic is impressive, John. Good stuff! You should have a website.

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  8. Joan Linney says:

    This chart is fascinating. Have you looked into how the higher price of gas affects consumer spending? Do people drive less when gas costs more? I know other countries tax the heck out of gasoline; is there a consistent…what do you call it in statistics…a corollary (?) that people always drive less where gas costs more.

  9. Joan Linney says:

    I’m open to advice on where to look for answers.

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