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Wednesday, March 20 , 2019, 11:55 am | Partly Cloudy 59º

 
 
 

Harris Sherline: Consequences of Rising Gasoline Prices Unavoidable

Christopher Steiner predicts $20 per gallon, but even incremental increases will have an effect locally

Gas at $20 a gallon. Sounds unbelievable, doesn’t it? But that’s the conclusion reached by Christopher Steiner in his book $20 Per Gallon.

Looking at the situation on a local level, we can pretty well predict that, as the price of gas rises to unprecedented levels, people will adapt in ways that will affect their daily routines accordingly.

For example, my wife makes frequent trips to Solvang (about 16 miles round-trip from our home in Buellton). Her car averages about 19 miles per gallon, so each trip consumes almost 85 percent of a gallon, which costs about $3.50 at the price of $4.20 per gallon. In the past, she generally made about 10 trips a week, but that now adds up to a weekly cost of $35.

As the price of gas has increased from $2-plus per gallon to $2.50 to $3 to $3.50, then to $4, she became increasingly conscious of the cost. When it went over $4, she started commenting on how she would have to make fewer trips. Finally, at $4.20, she is consciously thinking about how she can do less driving around the community.

To add further perspective to the situation, here’s how much her short, local trip will cost as the cost of gasoline continues to go up:

» At $4.50 per gallon: $3.83 = $19.15 per week, $82.92 per month

» At $5 per gallon: $4.25 = $21.25 per week, $92.08 per month

» At $5:50 per gallon: $4.68 = $23.40 per week, $101.39 per month

» At $6 per gallon: $5.10 = $25.50 per week, $110.49 per month

» At $8 per gallon: $6.80 = $34.00 per week, $147.32 per month

If Steiner is right and the price should go to $10 per gallon, the cost of my wife’s trip into town and back will be $8.50.

Think about the people who work in the valley and live outside the area, say in Lompoc or Santa Maria. The round-trip drive from Lompoc is about 45 miles, which would increase their cost of driving to and from work as follows:

» At $4.50 per gallon: $10.67 = $53.35 per week, $231.17 per month

» At $5 per gallon: $11.85 = $59.25 per week, $256.73 per month

» At $5.50 per gallon: $13.03 = $65.15 per week, $282.29 per month

» At $6 per gallon: $14.22 = $71.10 per week, $308.08 per month

» At $8 per gallon: $18.96 = $94.80 per week, $410.77 per month

The round trip from Santa Maria is about twice the distance from Lompoc, which would roughly double the cost of their driving to and from Lompoc to work in the Santa Ynez Valley, while the cost for those who drive to and from work in Santa Barbara would be about the same as the round trip from Santa Maria.

Of course, in addition to their own increased driving costs, employers will be forced to try to help employees adapt to the situation or face the potential of losing some of their key people.

It doesn’t take much imagination to visualize the impacts that these increased costs of gasoline will have on the local economy and the driving habits of those of us who live in the area.

As the price of gas continues to rise, people will stop driving SUVs, which will have significantly lower resale value, while the sales of hybrid cars will increase. The use of public transportation in those areas where it is readily available will expand, driving for pleasure will be curtailed and the resale value of large cars will drop while the cost of used cars that get good mileage will go up.

Furthermore, as difficult as it may be to imagine, especially in the Santa Ynez Valley, the sale of pickup trucks will decline dramatically (because of their low mileage), and vacation and leisure driving will no longer be affordable.

We will make fewer trips to and from the market and the drugstore, stop driving long distances to shop or eat out, while the cost of just about everything will go up as the cost of trucking food and various goods into the area is affected by higher gas prices, and higher fuel prices will increase the cost of the goods they carry.

The consequences of rising gasoline prices are inescapable and far more consequential than this brief commentary can cover. For those who are interested in a more comprehensive analysis, I recommend Steiner’s book. It’s well worth the read.

— Harris R. Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital who as lived in Santa Barbara County for more than 30 years. He stays active writing opinion columns and his blog, Opinionfest.com.

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