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June 27, 2008

Tradeoffs in where you live

High gas prices are causing people to rethink many things in their lives. One is where they live. Moving closer to work and shopping is one way to reduce commuting and gas costs, but would there be any downside to doing this? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"The downside is you run up against something economists call the 'rent gradient.' And what this simply means is that locations - residential locations that are closer to centers of economic activity, be they centers of work, centers of shopping - are more valuable and more people want to be there because it does cut down on commuting costs. But therefore, they are going to cost more. So the point being that most people will find that if they move closer to their place of work, closer to where they go to school, closer to areas where they shop, they are going to find that the price per square foot of homes is higher, rents are higher for apartments. What this means is that if you have a budget for housing - you can only spend so much on housing - if you do move closer, let's say to your place of work, you're probably going to only afford less housing space. You are going to maybe have to cut down from a 2,000 square foot house to an 1,800 square foot house. So the tradeoff here is that yes, you can reduce your gas costs, you can lower your commuting costs by moving closer to where you work and where you shop and where you go to school, but what you'll probably have to give up is you will have to live in a smaller residential unit."

Posted by Dave at 08:00 AM

June 26, 2008

Coping with less

With faster inflation and a slower job market, many families are trying to make budgets stretch and do with less. Is there any advice economists can offer to make this easier? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, the first piece of advice is obvious. It's something that most people don't like to do. I don't like to do it. And that is to sit down and prioritize your spending. Make a list in terms of where your money goes from most important needs to less important needs, and for those ones at the bottom of the list, try to reduce them or eliminate them. Now what this means is you have to make choices. And you have to cut out things that obviously you have been doing that you find are valuable, and no one likes to do this. It's not fun, but in many cases it is necessary. The second thing I would advise people to do is try to substitute. Try to find items that serve the same purpose yet are lower in price, and substitute those for higher-priced items. For example - very mundane example - bread prices have gone way up. Now bread is a source of carbohydrates, maybe you would want to substitute potatoes for bread in your meals. In fact, potato prices have not gone up much at all. So that would be an example. In terms of getting to work, obviously look at mass transit, if available. Look at carpooling instead of driving alone. And then in terms of your meals, perhaps substitute more homemade meals for more expensive restaurant meals. And then finally, I would say consider big changes. If you are always the person getting laid off first at your job, and this has happened time and time again, maybe this is a signal that you need to do more to increase your skills, increase your qualifications. That is, make a plan, perhaps, to go back to school and get more education."

Posted by Dave at 08:00 AM

June 25, 2008

Will shale oil increase oil supplies?

The world is looking for more oil supplies, and one candidate is oil shade. First, what is oil shale, and secondly, could it be the answer to our energy needs? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Oil shale is rock that when heated to extreme temperatures can produce an oil-like substance that can be suitable for refining into energy products. And the U.S. has large, large supplies of oil shale. In fact, we have more supplies of oil shale than Saudi Arabia does of liquid oil. But there are issues related to turning that oil shale into usable energy. First of all, pollution. The process of taking oil shale into energy creates both air and water pollution. Also the process uses large quantities of water. And then finally, it could take up to a decade once you find the oil shale to get it to market. So with today's technology, we certainly have the potential of seeing substantial energy supplies from oil shale, but it's not a short-run solution."

Posted by Dave at 02:31 PM

June 24, 2008

Are we better off than our parents?

A long-held standard in our society is that children did better economically than their parents. But with all the current economic issues in our country, is this goal still being met? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"We have a new study that tried to directly answer this question. What it did was compare the income of adults during the period 1997 to 2003 to the income of those adults' parents during the period 1978 to 1980. The major result was they found that children did do better economically than their parents. Specifically, 71 percent of persons whose parents were in the bottom half of the income distribution moved up. Although the income gain was no more than 20 percent, and this gain was actually less than we have seen in past generations. The study also found that men were more upwardly mobile in terms of income than women. But the major, major finding was that those with education - more education - were the most upwardly mobile in terms of income."

Posted by Dave at 08:01 AM

June 23, 2008

Do we have an energy policy?

In light of today's oil and gas prices being so high, we hear people criticize the federal government for not having an energy policy. These critics think our government should have done more to direct energy usage and develop more energy supplies. Is this a fair criticism? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"On the energy usage front, the government has over the years given various kinds of tax incentives for people to use alternative energy sources, for example, solar power, or in terms of vehicles, hybrid cars. Many critics though say those incentives have been inconsistent and very small. There have also been major subsidies, and there are now major subsidies for the development of energy alternatives like ethanol, although there is now some questions about that. We do have a continuing debate within the government and outside the government about finding more conventional sources of energy like oil, concerns about the environmental impacts of that. Also, nuclear power could be expanded. There are safety issues there. So I don't know that it is fair to say we've not had an energy policy. We've had an energy policy debated, we just have not had a consensus. But there is one area where I think the government has had success, and that is in nudging the private sector to be more energy efficient. Over the last 30 years, we have had many new standards issued for energy efficiency in areas like appliances and in terms of miles per gallon of fuel efficiency for vehicles. And we've seen a big payoff here. In fact, average energy efficiency in our economy has doubled over this time period. So I would conclude that if we do have an energy policy, it is in promoting more energy efficiency."

Posted by Dave at 08:00 AM

June 20, 2008

Is speculation behind high oil prices?

Although oil prices have been rising this entire decade, the rise just this year has been dramatic, up over 30 percent. This has led many to look for reasons beyond normal supply and demand, and some fingers have been pointed at speculators. Could speculation in oil be the reason we're now paying almost $4 a gallon at the pump? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Speculation would mean that traders are buying contracts for future delivery of oil and thus bidding up the price of oil. Now for this to work, it would actually require oil to be hoarded today, that is, taken off the market. Yet there is no evidence of this. In fact, inventories of oil are very low. Also, we have seen price increases for commodities where no futures contracts are available. I think a better answer is to link oil prices this year to our Federal Reserve and the Federal Reserve's policy this year of dramatically lowering interest rates. What that has done is, it has stoked the fires of future inflation and fears that inflation will be higher years down the road. Those inflation fears have gotten priced into the price of oil. Now the good news here is the Federal Reserve appears to be done lowering interest rates. So this will give us some hope that oil prices will stabilize and maybe - maybe - even head down."

Posted by Dave at 08:19 AM

June 19, 2008

Consumption versus investment

We're fond of home improvement programs, and on many such programs, the homeowner will ask the experts if the owner will see the value of his home rise enough to cover the cost of the improvement. Homeowners are usually disappointed if they’re told, "no." Should they be? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Not necessarily, and I think this illustrates the difference between what economists call investment value and consumption value. Let's say that we're going to remodel our kitchen, which we actually did a couple of years ago. And let's say that we estimate that it's going to be a $50,000 job. Let's say that we also then consult with a real estate person and say, 'Are we going to get that back if we sell our house in a couple of years?' And the real estate person says, 'No, you're not going to get $50,000 back, maybe you'll get $40,000 back.' Well, does that mean we shouldn't do the remodel. Well, not necessarily. Obviously, we're getting $40,000 of the $50,000 back, so that's the investment value, but it may be that you and I are going to get such pleasure, such enjoyment out of that new kitchen over the next couple of years that it's worth $10,000 of what we would call consumption value to us. So that's the way people should look at these remodel projects and really any kind of monetary outlay. In some cases, you're going to use that money to gain more money in the future. That would be an investment. But in other cases, you're simply expending the money because you're getting pleasure. You're not seeing that pleasure in terms of dollars but in terms of psychic pleasure. That's consumption value, and that's certainly very valuable."

Posted by Dave at 08:30 AM

June 18, 2008

Valuing real estate

In many markets, real estate values have fallen, and potential buyers are looking at bargains. But let’s say we’re interested in a beach condominium, how would I go about deciding what price to offer for it? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"The easiest way is to consider it first as an investment property, and there you would look at two things. You would look at the annual profit you could earn by renting that property out - obviously, what you would get back in rent minus your cost. Secondly, you would look at how much the value of that property might go up each year. Now obviously, that's going to be a guess, but that's very important. So you have two benefits there to having the beach property. One is the profit you make each year by renting it. Secondly is the appreciation, the value. And what you would do is lay those out over some time period, maybe over 15, 20 or 30 years, however far you want to go, although the farther out you go, the less difference it makes. And then you would use a technique, which we can't go into here, called 'present value analysis' to convert that stream, if you will, of profits and appreciation to a single value today. And that value would be the maximum you'd be willing to pay for the property. And so you would not want to bid for the property over that, and to the extent you that can get the property for less than that maximum, it would be a good deal for you."

Posted by Dave at 08:00 AM

June 17, 2008

Price versus cost

Two of the most common terms we hear used in economics are price and cost. They seem almost interchangeable, but to an economist that may not be the case. So what exactly is the difference between price and cost? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"This difference is one of the things that trip up students, in my experience in teaching economics for 30 years. Cost I think most people can directly relate to. Cost is simply what it takes, in terms of dollars or resources, to produce a particular product or service. So let's say we're looking at a restaurant meal. You look at the cost of the food that goes into that restaurant meal, the labor, maybe some piece of the building and the kitchen equipment and so forth, so basically, what the costs of the inputs are that go into making that restaurant meal. Now, price, on the other hand, some would say, 'Well, price should be the same as cost.' But not necessarily, price is simply what someone is willing to pay for that product or service. So price is really more of a demand or consumer phenomenon, whereas cost comes from the supplier. And so, for example, the price of that restaurant meal would be the price that the owner thinks that he or she can sell it at and is posted on the menu, and the owner will see if that's the right price by how many people are willing to come into the restaurant and pay for it. Now, usually price is greater than cost. That's what gives a business a profit. But it's not always the case. Sometimes price is less than cost, and we're seeing that right now in our down economy, for example. Some real estate is selling at a much lower price that what the cost of that real estate is, and that's a signal to the business to change things, to get out of that business or perhaps try to become more efficient and produce things at a lower cost."

Posted by Dave at 08:00 AM

June 16, 2008

Megacities

Everyone knows the world has changed dramatically in the past several decades. As part of this change, some say we no longer live in small towns or municipalities but in megacities. What are these megacities, and how important are they? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Megacities are urbanized areas that may stretch over hundreds of miles. For example, some claim that there is a megacity that stretches from Boston to Washington. And also, there is a megacity, some say, that goes from Raleigh-Durham to Charlotte and Atlanta and all the way to Montgomery, Alabama. Now clearly, these are separate cities, separate municipalities, but the point is that they're linked, and that a lot of the area between those cities is rapidly urbanized. And these researchers say that these megacities are really the true economic engines of our modern world, and you think of megacities instead of states or instead of even nations. And so when you calculate how important economically some of these megacities are, it's very impressive. For example, it's estimated that the megacity stretching from Boston to Washington - which some call Boswash - produces $2.2 trillion of economic output each year. And the megacity that goes from Raleigh to Montgomery, Alabama is responsible for over $700 billion of economic output each year. So megacities may be the economic geography of the future."

Posted by Dave at 08:00 AM

June 13, 2008

Is it all about the fuel?

The big jumps in food prices have been blamed on a number of factors, and one that stands out is higher fuel prices. But are there some other contenders that should be considered behind the higher costs at the supermarket? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Yes, there is, and I think there's one very simple one, and it's increased global use, or demand in economic lingo. If you look at all the major farm commodities - like corn, wheat, rice, barley, milk - you've seen in this decade, in the 2000s, world usage has gone way up, and inventories have gone way down. And this results in a classic motivation for price to rise. Now, the reason for the increased usage is the world is improving, the economy of many of the world's developing countries is expanding very rapidly, and people are eating better, they're eating more, and that's putting upward pressure on prices. But this has caused another factor to come into play, and that is the increased price is motivating farmers to produce more, which is what we want them to do. Many of those farms around the world, however, are small and relatively inefficient, so their costs are rising perhaps more than the rise in price, and that's adding fuel to the fire here of higher prices. So one thing that can be done is to focus not only on producing more but producing more efficiently, and in many cases, this means working with small farms to have them become more efficient producers of food."

Posted by Dave at 08:00 AM

June 12, 2008

The logic of the gas tax

With gas prices so high, drivers are looking for any way to reduce the pain at the pump. Some have focused on reducing gas taxes levied by the state and federal governments. But what is the rationale behind having a gas tax in the first place? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"North Carolina has had a gas tax since 1921. We were one of the earliest states to have such a tax. The logic is that a gas tax is what economists call a user fee. Obviously, when we drive our vehicles on a road, we benefit from that. It gets us from point 'a' to 'b,' or it moves products and services from point 'a' to 'b.' And so drivers benefit, and it makes sense, therefore, for drivers who benefit to pay for those roads. And one of the easiest ways to do that - it was figured out a long time ago - was simply to tax the fuel that all of us have to use when we drive. So that is really the logic behind the gas tax. The more you drive, the more fuel you use, the more you use the roads, therefore, the more you pay. But this has created, actually, some issues today. One is fuel efficiency. People are getting better fuel efficiency - which we want to encourage - are using more of the roads, but they are paying relatively less because they are getting more miles per gallon. That's an issue. Another issue would be cars that use alternative fuels - where they don't pay, they don't use gas - they are not going to pay as much of a gas tax. So that's an issue. So today people and economists and decision makers are perhaps looking at alternative ways to fund roads, maybe generally from general tax funds, or maybe from something like a mileage tax. All of this, of course, is in the thinking stage. People should stay tuned, but we may have a big change in the future in how we pay for roads."

Posted by Dave at 08:11 AM

June 11, 2008

Are we spending enough on infrastructure?

Roads, bridges, sewers and public buildings are, to most of us, not very exciting, yet we rely on them every day. Indeed, if these infrastructure investments didn't exist, our economy likely wouldn't function. So are we paying enough attention to our infrastructure? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Probably roads and schools get the most attention, but I think your characterization of infrastructure is right on the mark. We don't think, obviously, about public buildings where, for example, justice is carried out or we don't think about the sewer system. We do see schools, we do see roads, but the point is that infrastructure, as you said, is extremely important. And economists are concerned - many are concerned - that there has been a shift in government spending over, really, the last 30 years away from spending on infrastructure to other things. And some economists have estimated that we now have an infrastructure backlog. For example, here in North Carolina, it may be in the tens of billions of dollars. And I think the issue here is the one you pointed out. If we don't invest in infrastructure, that can increase private costs. For example, if we don't build roads or maintain roads, we are going to have probably extra costs for car repairs. If we don't build schools, we are not going to have learning taking place, and we need educated people for our future. If we don't have an adequate sewer system, we may not have an adequate water supply, and we, of course, have seen recently in North Carolina what that can do. So infrastructure is often not a headline-grabbing government function, but it is very key to our economy."

Posted by Dave at 08:27 AM

June 10, 2008

A windfall profits tax

There's a discussion going on now about whether oil companies should pay an extra tax on the profits they've made as a result of high gas prices. Some refer to this as a windfall profits tax. What are the pluses and the minuses of this idea? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"A plus would obviously be that the government would get more tax revenue from oil companies. Some have suggested that tax revenue could be taken to either reduce gas taxes that we pay at the pump or to be invested in alternative fuel. But there are some downsides. Number one is determining what is an extra profit. Profits are determined in the market place, and there's no necessary guideline that says one is a profit too high and one is a profit too low. So that would have to be determined. And secondly, there is a concern that if you tax away high profits - companies, when they're making them - that's going to reduce their motivation to produce more of that product. In other words, one of the benefits of a company making high profits is they want to make even higher profits. They want to go out and find or produce more of that product that's given them the high profits. And of course in the case of energy companies - oil companies - that product is oil. And so there's a lot of money being spent right now by energy companies and oil companies trying to find new sources of oil. This is going on in South America, in Asia, in Canada, even here in the U.S. some old oil wells have been reopened. The concern is if you tax away that profit, you essentially would be taxing away that money that's going to that extra exploration. In fact, we did this in the 1980s. We did have a windfall profits tax on oil, and we saw as a result, domestic production fall and our dependence on foreign suppliers go up."

Posted by Dave at 08:20 AM

June 09, 2008

Should you trade in the gas guzzler?

With gas prices so high, many people are reconsidering what kind of vehicle they drive. Some are even thinking of trading in their big, low-miles-per-gallon vehicle for something smaller and more fuel efficient. Is this necessarily a good idea? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Certainly if you could sell your big vehicle that gets low miles per gallon and purchase a smaller one at a lower price or with lower payments, and then that smaller one uses less gas that's going to be a win-win. But here's the situation many people would face: they'd have to sell their big vehicle, and right now prices on those are very depressed. You're not going to get a lot of money for it. You're going to have to go out and get, perhaps, a new vehicle, and those new vehicles, even though they're small, may carry a bigger price tag. So you're going to have to pay more money up front, or your monthly payments are going to be larger. So then it really is an investment decision. Is it better for you to pay more now in order to save money on your fuel costs down the road? Now, if you're looking at a monthly payment situation, it's very easy to calculate. Look at how much more - if you have to buy a new car - how much more in monthly payments you're going to have to make. Compare that to the fuel savings. And if you're not saving anything - that is, if the fuel savings don't counter balance the extra monthly payments - then, of course, it's a no-brainer. You wouldn't want to buy that smaller car that gets better gas mileage. So this is the kind of thing that you have to do. You just don't want to go by your gut and say, Oh, I'm going to get a small car, and I'm going to save money on fuel. Saving money on fuel is fine, but you have to consider the carrying cost, the ownership cost of that new vehicle in order to determine if it's really a net plus for you."

Posted by Dave at 07:52 AM

June 06, 2008

Is inflation being understated?

Egg prices are up 30 percent, milk prices 16 percent, cheese prices 14 percent, and gas prices are up 30 percent, all over the past year. Yet the overall inflation rate is only 4 percent. How can this be? Is there something wrong with how economists and statisticians measure inflation?
Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"I think the answer is to understand how the inflation rate is measured. The government each month looks at the prices of hundreds of products and services sold in over 20,000 outlets, and they calculate an average price index that's not only based on price changes but how important that item is to the overall consumer's budget. For example, you mentioned eggs, milk, cheese all going up at double-digit rates. Each of those items, however, account for less than 1 percent of consumer spending. Even gasoline, which has gotten a lot of attention, takes only six and half percent of the average consumer's spending. So when we look at the overall inflation rate, we have to factor in not only price increases but how important that item is in the consumer's budget. And then there's one other element. The fact is that many items have actually gone down in price over the last year. Appliances, furniture, tools, clothing, TVs, computers have all seen price declines in the last 12 months. So you have to remember when we're looking at the overall inflation rate, it is just that, an overall inflation rate based on all items and based on their relative importance."

Posted by Dave at 08:00 AM

June 05, 2008

A gas tax holiday

There's increasing talk about suspending the federal gas tax for a few months to ease the pain of high gas prices on all drivers. Does this seem to be a good idea? What would be the consequences? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"In terms of what it would save people, it would reduce what we spend at the pump initially by about 18 cents per gallon. That is the federal gas tax. So that is not going to make a tremendous amount of difference, but obviously the more you drive, the more you are going to save. But there are a couple of questions here. Number one, recognize that 18 cents per gallon goes into the federal highway fund, which in turn gets sent back to states. And actually, North Carolina gets back about dollar for dollar what we send to Washington. So if we're not collecting that money, that means there is going to be less money for road building and maintenance. That means that there may potentially be more traffic congestion, more car repairs because roads are bumpier. So we're not going to save that totally when you take that into account. Secondly, if drivers drive a little bit more as a result of that price coming down - that 18 cents coming off - that will actually cause, later, the price to go back up a little bit. So we likely won't save the full 18 cents per gallon, and that money will go directly to the gas companies, the oil companies and the producers of oil. So I think we have to counter balance the benefits here that people see from saving 18 cents per gallon against these possible negative impacts."

Posted by Dave at 08:00 AM

June 04, 2008

Solving the debt puzzle

It appears Americans are in over their heads with debt, plus statistics show we save very little. So, what's happened? As a nation, have we just thrown caution to the wind? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Economists are trained to look at incentives for what people do, and of course, we look at economic incentives. So when we look at debt and savings, we say, 'Have there been incentives to go into debt and have there been disincentives to save?' And the answer is - if you look over the last say six or seven or eight years - you would say, yes. There were big incentives to go into debt because going into debt was cheap. If you look back at 2003, 2004, 2005, we had generation-low interest rates, interest rates were never that low in 25 or 30 years. So it made sense for people to take advantage of those interest rates and take on debt. On the savings side, people were not taking money out of their paychecks and saving it, but what was happening is our assets were going up in value. Stock market was going up, housing values were going up and, in essence, those assets were doing the saving for us. So it made very good sense economically that people were not saving out of their paycheck, and people were going into debt. Now those factors have all changed. Debt is more expensive, stock market, housing markets are not going up like they used to. So many economists are expecting - again, not immediately, but down the road - that savings will come back in style."

Posted by Dave at 08:18 AM

June 03, 2008

Will we change how we live?

For someone to change their life style is a major effort. Some say we'll see more such shifts in response to more expensive energy and gas and greater congestion. What kinds of shifts might we see? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, one of the biggest shifts that we could see is how we live and where we live. If you think about it, since World War II, we have developed an economic landscape based on relatively inexpensive gasoline. That's been one of the big reasons we've developed suburbs and exurbs and malls and freeways. It's all made possible by the automobile and cheap gas. Now the cheap gas is gone, probably forever. Some people think this is slowly - this is not going to happen overnight - this is slowly going to change how we live and where we live. Location and proximity to work and shopping is going to be more important because it's going to save you energy. It's going to save you time in driving to those places. Some expect to see more dense development, people living closer to their places of work, places where they shop. Many think there will be a revival of cities, inner cities, small cities and towns, less building, less living in suburbs and exurbs and for those who can, more telecommuting."

Posted by Dave at 08:00 AM

June 02, 2008

Coping with high gas prices

It looks like the high gas prices are here to stay. How are drivers dealing with these prices, and are they doing so in a way economists would predict? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Well, behavior is changing in a number of ways. First of all, we are driving less. Traffic levels are down 1.4 percent this year compared to a comparable period last year. We're also consuming less gasoline. That's off .3 percent this year over last year. We're changing the kinds of vehicles that we're buying. SUV sales are down a whopping 27 percent from last year, truck sales are off 14 percent. And how are people getting to work? Well, an increasing number of people are using public transit. The use of public transit is at a 50 year high. Now, all these changes, I would say are exactly in line with what economists would expect from higher gas prices. People are looking for ways to move away from those higher gas prices, changing how much they drive, changing the kinds of vehicle they are buying and using more mass transit."

Posted by Dave at 08:00 AM