Gas Prices Demand 'Margin Management'
HUNT VALLEY, Md. (TheStreet) -- Only a year ago, gas prices nationwide were at manageable levels. At $2.85, the average U.S. household -- according to government figures showing purchases of a little over 1,100 gallons of gasoline per year -- was spending $3,135 annually.
Even with a slight dip in oil prices that followed news of Osama bin Laden's death, a year's worth of gas at today's prices could easily cost $4,400 -- an additional $1,265 per year, or $105 per month. Not exactly pocket change. And we must consider that some analysts are predicting a near certain $5 per gallon -- an estimated $2,365 more than last year, or $197 more per month.
|A year's worth of gas at today's prices could easily cost $4,400 -- a jump of $1,265 from last year. Consumers' budgets have to make up for that.|
Oh, did I mention the cost of the average American summer vacation is $1,600? What do you think will give?This is an increase that won't be easily absorbed by the vast majority of households. Getting hit the worst are 40-somethings with three kids in six sports. In addition to the pain felt directly at the pump, we have a host of existing economic problems indirectly but materially affected by the spike in fuel costs. The math looks something like this:
strategic discipline = margin = freedom
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