As she’s watched the price of gas take a bigger slice of her budget over the past year, Kelley Tyson has slowly cut back on many things — lunches out during the workweek, dinners with her husband, even trips to visit her family on weekends.
Recently, the mother of two realized it was time for an even bigger cut, and the family traded in its SUV for a more efficient four-door sedan.
“We eventually hope to get another one, but that’s a huge sacrifice for us,” said the 32-year-old resident of Lake Saint Louis, Mo.
The slow and seemingly inexorable rise in gas prices over the past two years has reached a fever pitch in recent months. That's taking its toll on many Americans, especially when coupled with weakness in the housing market and increasing costs for things like groceries. Faced with paying more at the pump, some say they are cutting back on restaurant outings, shutting off cable or Internet access, paring clothing budgets and even scrimping on necessities such as food.
Economists say there’s no doubt that Americans are tightening their budgets.
“There’s less consumption going on,” said Brian Bethune, U.S. economist with Global Insight. He cites a slight decline in gas consumption and a steep pullback in spending on automobiles.
Bethune also suspects that more Americans are substituting higher-priced goods with cheaper ones — choosing McDonald’s coffee over Starbucks, for example, or hitting a bulk warehouse chain such as Costco or Sam’s Club instead of a pricier grocery store.
The situation could get worse soon. Prices at the pump have been pushed to levels many couldn't conceive of even a year ago, and analysts and the Energy Department are both expecting the cost of gas to rise even further this spring and summer.
For many, obligatory commutes and a lack of public transportation make it tough to cut back much on the one thing that could make the most difference — driving itself. Still, faced with paying $3.50 or more per gallon, some Americans say they have been forced to drop their cars altogether, or at least to reduce trips to the mall or even grocery store.
Patricia Brown had never commuted via public transportation until about a year ago, when gas prices hit $3. Now Brown spends one hour and 45 minutes every day on a bus and train, plus another 17 minutes (yes, she’s timed it) walking 1.1 miles from the station to her office.
Brown, who lives in Glen Carbon, Ill., said her commute used to take anywhere from 45 minutes to over two hours depending on traffic, and giving up her car has meant sacrificing time at the gym and night classes. But on the plus side, Brown said she’s happy to leave the driving to someone else when the weather gets nasty, while she knits or crochets. The cost savings also have allowed the 63-year-old to stay on financial track.
“I can save more money for my retirement,” she said.
For people who are already retired, a sudden spike in gas prices can be even more of a blow.
When he was working in Silicon Valley, Lee Dolce didn’t give much thought to pulling out his debit or credit card. Now retired and dealing with higher gas prices while living on a fixed income, Dolce and his wife have become diligent comparison shoppers, seeking out the cheapest grocery store, buying house brands instead of name brands and going to fast-food restaurants instead of splurging on pricier meals.
The 62-year-old resident of Lincoln, Calif., has even resorted to a budgeting trick he remembered his mother using decades ago: He and his wife have started withdrawing a specified amount of cash each Friday, which they put in an envelope and rely on for the next week.
“When you spend cash for things, you really see the value going out,” Dolce said.
The couple also has given up on day trips into the mountains, and they are considering trading in their Chrysler van for a more fuel-efficient vehicle. But while Dolce does use a scooter to get around town sometimes, he said he hasn’t been able to let go of the Porsche Boxster he bought with an inheritance a couple years ago.
“We’re hoping it’s going to only be (for) the short-term,” he said of the couple’s budgeting.
It was around Halloween when Bruce Barcusky decided it was time to really start to “tighten up the belt” in response to rising gas prices and other costs. These days, Barcusky, his wife and their three kids are eating out less, and then only for special occasions, and have cut back on things like clothes.
The West Chester, Pa., family also is trying to plan errands better so they can accomplish more with less gas, and Barcusky said they may cut back on some luxuries during their next family vacation.
But while Barcusky, 50, said he might mow his lawn less this summer if gas prices continue to go up, he’s not prepared to make even more drastic changes — yet.
“I’m not a proponent of driving around in a hybrid or one of those cars that gets 30 or 40 miles to the gallon,” Barcusky said. “That, unfortunately, is not a choice I can make with a family of five.”
Lindsey Jones, 25, said her family has already cut out extras like videogames and movies as gas prices have risen. Now, they are buying more food in bulk and considering starting a garden to save on food costs. She also is keeping the heat lower, and encouraging her kids to wear warmer clothes in the house.
Still, it’s not been enough to totally offset the increase in gas costs, especially since Jones and her husband live in rural Doyle, Calif., and have to drive 45 miles to Reno, Nev., for errands. Next, Jones plans to trade her SUV for a regular car, and is even looking at solar or wind power alternatives for their home.
While gas prices represent one of the most tangible hits to the wallet, it’s just one of several problems at play, said Dean Baker, co-director of the Center for Economic Policy and Research.
“Gas prices don’t help, but I think the housing prices are a bigger part of it,” he said. “People have lost a lot of wealth.”
Tyson, the former SUV owner, said she has lost equity in her home, and she and her husband also worry about how the housing downturn will impact a rental home they hope to sell.
“If we just had a gas price increase and that was it, that would probably be OK to handle,” Tyson said. “But when you’re handling not getting raises or the gas prices plus the mortgage mess, it can all really make for some not-so-good times.”
Still, Tyson said she’s determined not to let the current situation get the best of her. As painful as the gas bills might be, the family is still planning a driving trip to North Carolina.
“There’s so much bad news, but that’s the one thing we won’t sacrifice on, because it’s the family vacation,” she said.