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How About Them Gas Prices…

March 8, 2011

I remember the first time  I was very aware of gas prices. I had been divorced about 4 months (I had just turned 27) and it was my visitation weekend with my kids. I had stopped at the pump to fill up on the way to pick them up and the gas prices were 67 cents a gallon. I remember calculating how much money I would need to keep the car running for the weekend with all that I had planned for us to do. Yes, weekend fathers cram a lot into their week ends to make up for the injustice given to them by the courts and ex-wives! As the gas prices increase (up & down) throughout the years it feels like it was just yesterday when I was counting the money in my wallet. Let’s call this blog the “on the road” forecast.

Gas prices will lift sales of small energy-efficient cars, hybrids and electrics…but not as much as you might think. One reason: many folks willing to shift to gas misers already made the switch, in 2008, when the first half of the year saw gas prices zoom by $1 a gallon. Small cars’ share of vehicle sales grew from 29% to 40% in six months. Hybrids and electric cars are still too pricey for consumers to be sure they’re an economical choice, particularly when shoppers aren’t convinced that pump prices will remain high for a long period. To make the numbers work for an average driver, a hike to $4 a gallon would have to last for several years to offset a $16,000 cost difference between a Ford Focus and Chevy Volt.

Longer term, sales of electric cars will accelerate, though not fast enough to meet President Obama’s goal of a million plug-in cars on the road by 2015. The best bet…between 500,000 and 650,000 electrics plying the byways by then. Sales growth will continue to be strongest in CA, Texas, NY and Fla where incentive programs to install charging stations, for example offer a leg up. Meanwhile commercial us of electric vehicles is gaining ground, with GE, Enterprise, Frito-Lay, Staples and FedEx making them part of their corporate fleets.

High oil prices have trucking companies taking a harder look at LNG (liquified natural gas), as a diesel alternative. Long touted as a cleaner, cheaper option than gasoline for cars and small commercial vehicles, natural gas is on its way to becoming a significant fuel for the more powerful engines on heavy trucks. At current oil and natural gas prices, the LNG needed to replace a gallon of diesel cost about $1.50 less. For trucking fleets that rack up tens of thousands of miles a year, the costs savings can more than offset the higher price of LNG engines. The biggest hold up is the lack of fueling stations. But a t least one company figures it knows how to solve that problem. Vedder Transport, a Canadian firm, is building its own network of stations, which will be open to other companies as well. The shift could benefit trucking firms’ customers too. With diesel prices going up, lower, more stable LNG prices might mean the end of fuel surcharges.

As many of you saw last week, Cosmo the amazing tax dog, was at the office all week and I was surprised by the prices at the pump. We drove to work each day as Cosmo is too big to fit into my backpack  (for subway travel). I realize that gas prices hadn’t been apart of my budget in a long while since I use the car so rarely. If you need help with your budget concerns or just need to talk about how you are going to make ends meet with these rising gas prices, give us a ca ll 212-979-6830. Gunwel Tax & Bookkeeping is here for you to discuss all of your financial needs.  You work hard for you money, let Gunwel work smart to help you keep it! See you soon.

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