Wednesday, July 23, 2008

Vacationers and the $4 gallon of gas

I had heard the stories of how people are skipping vacations because of the high price of gas, even talked to people who were not vacationing because they tallied up the price of gas and it would cost too much. I expected less traffic this weekend when I drove to Va. Beach area, but that wasn't the case. Since I have family living in Richmond, Va and Newport News, Va, my wife and I have been regular travelers of that route for the last two years. Traffic was at least as bad if not worse for our trip than in prior years. I don't know the statistics of visitors to the beaches this year, but if my extra 2 hours of traffic delays yesterday are any indication, beach vacations are as popular as ever. My hotel had not reduced it's cost to attract customers in a dwindling vacation market, on the contrary, they were booked to capacity as were all the other hotels in the area. When I thought about this long and hard I realized that even though gas prices doubled in the last year or so, compared to the cost of the trip, it wasn't a big increase. Not big enough to cancel plans or to skip driving to Newport News for a family members wedding. My minivan holds about 20 gallons of gas. So a complete fill-up adds about $40 compared to $2 per gallon gas prices. That tank of gas could get me there and almost back home. So my gas price may be $40-$50 higher than in previous years. My hotel was $250 for two nights, and I spent over $150 on meals and the customary round of pre-wedding golf. That was a 48 hour trip. Had we gone for an entire week, our budget would have been around $2500 and the extra $50 in gas wouldn't even be noticed.

We rarely think of it in total cost terms. My wife shops for the lowest price on gas. But even a 10 cent savings per gallon only saves us about $2 or the cost of my cup of coffee on a fill up.

Guess what the most popular vehicle on the road was...not just an SUV, but Chevy Suburban and Ford Expedition sized SUVs. The super-SUVs. And reasonably so, the space makes your drive more comfortable, and the extra large gas tanks makes it so you don't have to stop to fill up en route. My sister-in-law drives a Hyundai Tiburon and had to stop 2x in her trip from Western PA to Va Beach to fill up. When you have kids in the car, stopping is a 20-30 minute ordeal, not to mention the possibility of sturring up a fight or interrupting a movie. So the large SUV may add $100+ to your gas bill, but having space (with kids that translates into peace and quiet) and saving 4-5 stops and 2 hours of travel time is worth a 4% increase to the vacation budget. With the extra space, one can bring your own beach equipment, bikes, etc. which will save money and time over renting this equipment upon arrival. The benefits seem to outweigh the extra cost of gas and neither the low gas mileage nor the $4/gallon price tag seem to have slowed down vacationer traffic.

1 comment:

  1. You probably will not see families abandoning their vans or SUVs for long trips, but you will likely see more small cars for personal commutes. The price of oil and gas has started deflating and it looks like this will gain a momentum of its own and bring down prices somewhat. Hopefully we continue to push hard for a domestic energy supply and reduce the Middle East's ability to manipulate us.