Sunday, January 15, 2012

Frankenstein Government Prepares For Five Dollar Gas

Gas in Nampa yesterday was 2.90. This is as cheap as I have seen it in a very long time.

I wish I had a means of storing gasoline but government laws stopped that long ago. Storing an amount under 500 gallons seems pretty trivial although I have a couple of survivalist friends who have done that.

About two months ago, I began the arduous task of buying a car. I say arduous because I view buying a car like an act of war. If you know the nuances of an auto dealership then you know just what a bunch of vultures they can be. Their goal is to separate you from as much  of your money as "legally" possible. My goal is to keep as much of my money as I can. Thus the battle lines are drawn.

First I settled on a car. Originally, I wanted to buy a used Cadillac CTS but eventually the practical side of me won out. After a month or so of investigation and comparison shopping- I settled on the Hyundai Elantra. It was named car of the year last Monday. My new Elantra arrived at the dealership that day. Four hundred miles away in Salt Lake City.

My local Hyundai dealership represents some of the biggest vultures on the planet. Not only do they add every charge they can think of to the sticker price, but they added a 1500 dollar "market equalization" charge to their Elantras. Thus they priced themselves about 4000 dollars higher than a competitive dealer somewhere else. They really have no competing Hyundai dealerships in Idaho so they get away with this crap. I am too old to deal with that kind of robbery. I did offer to buy an Elantra locally for 16,800 which would have represented a mere profit of 1500 plus the extra couple of points that I would allow them to squeeze out of me on the interest rate. Say 2000 bucks, perhaps a little more including hold back. That was not enough for the local vultures. They did not even return my phone call.

I found a market with competing Hyundai dealers in Salt Lake City. I used each of the dealerships to beat up on the other one. Back and forth for over a month. I got the car I wanted, black with a brown interior, but most importantly I got a manual transmission. Not only did that save me another 1000 bucks, but I have been reading reports that people with the manual transmissions are getting better than the stated 29 MPG in city driving. I am old school. Manual trannys are far easier to fix. I tend to own cars a long time. Tomorrow, I will pick up the car. It gets 40 MPG on the highway, has bluetooth and an Ipod cable, heated rear seats (wtf), satellite radio, cruise, a/c. It has a 100,000 mile warranty. It has the best safety rating there is- almost. Full coverage insurance was dirt cheap- in fact it was less than liability on my old truck. I got the car for 15,886 out the door. The interest rate is competitive.

Sales tax is a grand. Damn that stings. But I will pay that in cash.

In December, I spent 480 dollars on gas. This was just driving around town. My old truck only gets 11 MPG. That is painful. Cutting the gas price down to 120-160 a month will pay for the Elantra all by itself.

I had to do some simple math. I based it on 4 dollar gas. In the Elantra, it will cost you 2500 gals of gas to travel 100,000 miles. At 4 bucks, this will cost you 10,000 dollars. In a 20 MPG vehicle, this will cost you 20,000 bucks. In an 11 MPG vehicle, it gets ugly. I will be parking the truck. Spread out over 10 years, the Elantra will cost you 2 grand a year less to operate just in gas.

I think it is very possible that we could see 5 dollar gas very soon. States are going to keep raising taxes. We are past peak oil. Countries (OPEC) are pricing oil and making agreements not to price it in American dollars. The fact that oil is priced in dollars keeps the price low here but stings countries using the yen and the euro. In addition to that,  I am beginning to think that President Numb Nuts is trying to start a war with the third biggest oil producer- Iran. Unrest and strikes in Nigeria are not helping matters either. http://www.reuters.com/article/2012/01/15/us-nigeria-strike-idUSTRE80E0AR20120115

My arguments against 5 dollar gas? A strong U.S. dollar in an election year. Obama does not want to see 5 dollar gas this summer. So I am sticking with 4 bucks for this year. That's where I see it. I think 5 bucks is on the horizon for 2013. I really do.

I don't want to be scrambling for an economy car then or trying to unload some upside down SUV when the 5 buck a gallon gas strikes. Or heaven forbid, what if the dollar folds up like a cheap suit and gas heads north of 5? We'll all be riding bicycles soon...which reminds me...spring is just around the corner.

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