NBC's Today Show is running a story this morning on the $100 fill-up. With gas prices hitting over $4.50 a gallon in some places, anyone with a tank that takes more than 22 gallons could find themselves topping two figures when they go to the gas station.
Since my tank is 20 gallons, I have not had that experience yet. But there are many people who have. I can only imagine that the first time someone spends over $100 to fill up their tank fills him or her with different emotions. Three that come to mind are anger, frustration, and a sense of helplessness. I know that more people are turning to motor scooters, such as the Vespa, which get 70 miles per gallon to get around.
But if your vehicle takes more than 22 gallons, it may be that you need more room than a scooter can provide. Have you reached that $100 a tank threshold? How do you feel about it? Are you doing anything differently as a result?
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter











Reader Comments (Page 1 of 1)
7-09-2008 @ 9:51AM
Bradley Miller said...
I'm not a "I told you so" kind of guy, but I will say that we reap what we sowed. Once upon a time, I had a lightweight aluminum engined car that got decent gas mileage and get this . . . it wasn't built 10 years ago, or 20 -- but at the time it was a 1962 Buick Special with either the V6 or V8 as options. There was a lot of interesting small cars produced by the Big 3 at the time, but alas, the buying public kept flocking to bigger cars. Now fast forward 40 some years and the same trend happened. Suddenly the farm/utility trucks blossomed into the latest status symbols of "I'm not driving a minivan" families across the country. Granted, some people have legitimate needs for SUV/trucks, but some people are just keeping up with the Joneses. I have to laugh a bit at the "cash cows" that people have been buying . . . suddenly we take a ?? year old truck platform, add some leather,bells, and whistles and charge insane prices for them and people wonder why manufacturers are building them left and right? Sometime soon the auto manufacturers will realize that they can make a very tidy profit on small cars when they start treating them just like the trucks in options and pricing. Before we go kicking the manufacturers around, go looking at the car lots and engine badges on what is out there . . . they only build what we ask for and we have determined what will be put into our garages. I think that gas prices will just be a further polarizing factor, because the ones who can afford it, will, and the ones who can't, will continue to fall further into economic upheaval.
7-09-2008 @ 10:52AM
meadow said...
You have a 20 gallon tank. . . can't imagine what you're driving. Is that a Tahoe, Suburban, or Expedition? An Escalade??
I have to echo Bradley Miller's post up top. If you're a big family and you need more room, and you're not "off-roading" or driving through snowbanks, a minivan is the car for you. This "I wouldn't be caught dead in a minivan" mindset among the elitist suburbans is really pathetic.
7-09-2008 @ 12:00PM
speculator said...
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7-09-2008 @ 4:02PM
David Obelcz said...
Yes, I'm the David Obelcz in the Today Show story. First to meadows comment above on the 20 gallon gas tank. The 2008 Toyota Camry has an 18.5 gallon gas tank, the Toyota Sienna minivan has a 22 gallon gas tank. The Nissan Altima, has a 20 gallon gas tank. Twenty gallons +/- 3 gallons is a VERY standard gas tank size for many cars. If your car gets 30 MPG highway and you have a 20 gallon tank, you have a theoretical range of 600 miles. For many car buyers a range of say under 375 to 400 miles starts to become a barrier.
The Toyota Tundra pickup truck, which gets the worst EPA fleet economy for fullsize trucks in America, has a 26 gallon gas tank. The Chevrolet Silverado, which for the record has the best fleet economy of fullsize trucks in America, has a 31 gallon tank.
During my interview with NBC I spoke actually for about 20 minutes, so for a bit more of the story behind the story.
I traded in my Chevy Avalanche in April of 2005, when gasoline where I live was around $2.25 a gallon and a tank of gas (average fill up of 28 gallons, no one runs to "empty") cost $63. I felt strongly that the price of gasoline would only continue to rise, and a number of life style changes including where I work, how far I drove to work, and how I use a vehicle day to day could simply no longer justify driving three tons of Mexican assembled sheet metal.
I went through an extensive examination in my buying decision. I weighed depreciation, interest rates, insurance rates, and had some strict requirements in my decisions:
1) Must seat five, comfortably
2) Must get a minimum of 20/30 MPG
3) Must have a trunk capable of holding a weekend worth of backpacking gear for four, or a weeks worth of luggage
4) Must have an established record of reliability from JD Power/Consumer Reports, etc.
5) Must not cost any more to insure than my Avalanche
6) Must not create a car payment larger than my Avalanche
7) Must not have specialized needs like an odd tire size, premium gas, or special care
8) Must be front wheel drive or all-wheel drive for snow and wet weather performance
9) Must be fun to drive
I looked at a number of vehicles, Pontiac Vibe/Toyota Matrix - too small. Mazda3, loved it but again, too small (I'm 6'1" tall, anyone sitting behind the driver seat would have had to be an amputee). Toyota Camry, incredibly boring to drive, toaster on wheels, etc. etc.
It boiled down to a Mazda6 4-cylinder 5-door 5-speed (a barrel of monkeys to drive, Mazda knows how to make 4-cylinder engines) and a Pontiac Grand Prix GT (base 6-cylinder). In the end the Pontiac Grand Prix won due to a much lower insurance rate, a better interest rate lowering the payment, and more content in the vehicle.
I've had the car for close to 3-1/2 years now and have about 67,000 miles on it and it has been touble free.
HOWEVER, gasoline now costs around $4.40 a gallon where I live today. My Grand Prix has a 17 gallon tank, so a typical fill up is right around 15 gallons, so an average fill up for me today is -- $66. Yup, the dollar for dollar savings is gone, although I am saving as noted, about $4,000 a year versus filling up the Avalanche.
The part of the story that ended up on the cutting room floor is, it is still darn expensive to fill up a car.
As for me I've taken further steps to reduce my driving. I'm hypermiling (not to the extreme), I telecommute two days a week thanks to my awesome employer, I take public transportation one day a week, and I now ride a bike for short errands within 3 to 5 mile radius from my house (say to pick up milk at the grocery store or rent a video). In 2005 my average yearly mileage was around 24K to 26K, I've reduced that now to 10K to 12K, but basically I'm at the end of my rope for economizing. I can't not drive and I can't move closer to work due to the high cost of housing.
I'm waiting for the next generation of electric cars and hybrids coming in 2010 ~ 2011, and if the Chevrolet Volt delivers all that it promises, there will be one in my driveway in the future.
$100 tanks of gas are a reality though, and you could be a family with four kids who owns a 4-cylinder minivan and still shelling out $100 to top off the tank, so this isn't a pain for just the "evil" SUV and truck owners.
There is no one really saying today that the truck/SUV as a personal vehicle is alive and well. Even General Motors declared the category dead back in late May or early June. But either all of the auto industry is REALLY stupid, or this simply caught everyone by surprise.
Case in point, Toyota spent billions of dollars developing larger, gas guzzling Toyota Tundra and Toyota Sequoia trucks and SUVs to compete with the American manufacturers. They spent billions of dollars building a truck factory in Texas and expanding an engine factory in Alabama. They flipped the switch on all of this to "on" in March of 2007. Yes, 2007. Toyota. Last month Toyota's sales suffered a steeper decline than General Motors, and their truck business was off 39%. Now you can call Detroit stupid, but Toyotas investments here then would have to be equally stupid.
Another point to consider is that the Honda Accord, which most would perceive is an efficient vehicle is only sold in the United States as the Honda Accord, and in 2008, it bloated out to a fullsize vehicle. The rest of the world gets the Acura TSX sold to them badged as a Honda Accord. American buyers as a whole like bigger cars and trucks and that is going to require a fundamental shift that will take decades to make happen with 247 million registered vehicles in America. EVERYONE who builds cars accomodates this American desire, whether they are headquartered in North America, Europe or Asia. It is going to take a long time for that to change.
For the record I believe in peak oil and I believe we are here, but I also have a realistic view on how/what it will take to meet that challenge.
Thanks for reading this.