Lower Gas Prices Won't Pay the Mortgage

In my previous post I said, "Lower oil prices and more efficient cars will leave consumers with more cash to spend on other things." While this is certainly a move in the right direction, I don't want to leave the impression that we're talking about a lot of money here.

Assuming the average driver rolled up about 12,000 miles per year and got 20 miles per gallon, he would need to purchase 600 gallons of gasoline per year. At $3.50 per gallon, he would spend $2,100 per year for gasoline.

But now gasoline costs about $1 per gallon less than it did a year ago. Furthermore, drivers are also driving less and more of them are shifting to fuel efficient cars. So let's assume our average driver now drives only 10,800 per year and gets 28 miles per gallon. At $2.50 per gallon, he spends $964 per year for gasoline.

While that might look like a big saving, it comes out to less than $100 per month. Yes, it does leave consumers with more cash, but not enough to make a mortgage payment.

Comments

[notsosmart:]

it doesnt matter.the dumb sheeples should be paying under $2 a gallon.who cares?what was yesterdays sports score?now thats important.

2008 Oct 28 11:39 AM

[lefty37:]

True, It will not make your payment. But if you only have $900 of an $1000 mortgage payment, you now keep your house.
Remember the fellow who peeed in the ocean, saying, "every little bit helps"

2008 Oct 29 07:06 AM