Friday, September 03, 2010

Vacations and Number Gut

The Labor Day weekend is upon us and many Americans will be heading off to who knows where to do God knows what. To wit, I heard a strange story on Bloomberg radio on the way in to work this morning.

Typically on their short news segments they give a few headlines, I am guessing culled from various wire services. They said the following:
Americans will take to the roads and skies for the Labor Day holiday in greater numbers than a year ago, thanks to low gas prices and pent-up demand for air travel, experts say.
I took a quick peek at the web and sure enough it was from this story.

As I was sitting in my car I scratched my head and said to myself - does the price of gas really matter to Americans who are deciding whether or not to take an auto vacation?

In my head I did a quick bit of cocktail napkin math and I came to the conclusion that the paragraph above is bunk. But lets give it a try here in pixels.

We do have to make a few assumptions and I like to make it easy. Lets say that your car gets 20mpg. Later in the article it says that the national price of gas per gallon is $2.68. If you travel, say, 500 miles, that is $67 each way for fuel, for a total of $134 (500/20 x 2.68).

The paragraph says that we Americans will be traveling more thanks to low gas prices. What does this mean? That if the price of gas were higher that we would not? Lets say that the price of gas is $4 per gallon. That makes the round trip cost $200 in fuel. Is that the point where people would no longer consider taking the trip? Just how expensive does gas have to be before we all just go to the next door neighbors and have a few beers and a brat?

Of course there are a lot of other variables in play - 500 miles is a pretty good distance, almost worth flying at that point since it would take between 7-8 hours to drive it (without traffic hassles in a big city). If you only took a 200 mile road trip with $2.68 gas that is only $53.60 in fuel. At $4 gas it is $80. These are pretty small sums and I am thinking that Americans would take their lodging and food costs in much higher consideration than the gas bill.

The article also says that gas is actually only .07 more expensive per gallon than last year. That certainly can't be weighing upon anyone's mind when deciding where to go for a vacation.

Being short on money and deciding not to go on a vacation at all makes more sense to me than the statement above in the referenced article that says that Americans are actually taking to the roads in greater numbers thanks to low gas prices. Bad math and faulty assumptions from it start my day off in a bad way.

Cross Posted at Chicago Boyz.

1 comment:

Gerry from Valpo said...

Traditionally we would take trips the weekend AFTER Memorial Day, 4th of July or Labor Day.

Destinations are less crowded and the roads aren't as congested.

Why deal with a large group of idiots when a smaller group will do?