High Gas Prices: The New Reality

I mentioned in a previous article that I got a look at gas futures all the way out to 2009, and the per-barrel price of crude only climbs from here. Mind you, the futures only go from May to September, and this pretty much covers the summer driving season in each year. As we speak, the price per barrel of light sweet crude (the kind we refine and drive on) is about $64, and is forecasted to go to $72 by 2009—this isn’t taking hurricanes, political instability, or refinery shutdowns into account, only consumer and trader demand.

Meanwhile, we consumers are no longer shocked, only annoyed, when it takes twice or three times the amount of money to fill up than it once did.

We’ve all seen or heard of the things we can do to our cars to improve our own mileage, but there is one thing that hasn’t really been mentioned: how we drive.

We tend to go hither and yon in a vain attempt to get our stuff done, and most of our weekly driving is to one place: work. Since we HAVE to go to work each week, it only makes sense that we make an effort to move closer to work, cutting down on the miles commuted. If shopping exists in places closer to work, allowing you to get stuff done in a smaller driving area, this would make the most sense.

Another thing we can do is plan our routes. Instead of driving aimlessly through towns like a ricocheting pinball, plan the trip so you either go in a line or in a circle for maximum efficiency, consolidating your driving. Also, determine whether or not you truly NEED to go to the places you would normally visit—cutting out unnecessary places cuts out unnecessary miles, saving both gas money and car wear. If it means moving your shopping to another (unfamiliar) store, so be it.

I myself am forming such a plan—I figure with Hubby’s commute being the regular driving around here, I can move the family to somewhere closer to that work, and my shopping to the new area. Never having considered this option before, I’m now keeping my eyes open to see what stores and services are available in the neighborhoods closest to his work. I always figured that 11 miles one way was as close to work as we’d want to get, but the times (and gas prices) are a-changin’. We can get closer, and we can access the same kinds of services and stores over in that area just as well…AND NEVER HAVE TO HIT THE FREEWAY AGAIN!

I’m sure it’s the same for many other people too—it’s just a matter of push-come-to-shove. I’m not waiting for things to come to that.

I’d rather plunk money down for a house than plunk money down for a so-called “fuel-efficient” car, because one appreciates, and the other depreciates. I already own my cars, and plan to pay cash for a suitable house in the new area. Then all Hubby will have to do is work to cover our expenses. Could this be some sort of quasi-early retirement?

Seasonal high gas prices are here to stay, and I wouldn’t be surprised to see them high into the off-season as well. We cannot quit driving altogether, but we can make better use of the gas we DO have. Instead of blowing it on a Memorial Day trip when everybody else is hitting the road, play it low-key and contrarian by doing something at home—same thing for Labor Day, and all the other “mass-migration” holidays. I personally refuse to be on the road with all the nut-jobs rushing to get to their holiday destinations, because they tend to cause accidents. I want to live to blog again.

Nowadays, it seems like if you want to see Mom and Dad during Christmas, you probably shouldn’t have left home (or the hometown) to begin with. Drive, fly, it doesn’t matter…either way, you’re using SOMEBODY’S gas and paying for the privilege. I realize some of us HAVE to, but many of us could stand to re-think our travel plans, and how we get from Point A to Point B.

Update: what can "brown" do for you? UPS can teach you more efficient driving skills, like this one--only making right turns. This way, you're never stuck at stop signs and red lights burning gas.

The Car-Fax Story, or How I Haggled Electronically

During the days before car lots got smart enough to put their inventory on the internet, I had to do a lot of work on foot. I happened to read a story of how a man in Texas bought his ultra-luxury car sight unseen, using a fax to negotiate, because the dealer was in a different state.

I thought I’d give this a try locally—not the sight unseen part, but the fax part. This would avoid the high-pressure salesman exposure almost entirely, and the worst he could do was say no.

The homework part I did on a Sunday—checking the car out through the windows, making note of mileage, options, what features I could see, make/model, and VIN number. I also made note of the condition (outside, upholstery, dash, tires, etc.), then I went home to scour through a manual copy of the Kelley Blue book (before Kelley was online). I also did my mileage math to make sure this car still had life left in it.

The next day, I went to my DMV office to get a copy of the VIN report, and all seemed well. There was a legitimate local owner listed, the car hadn’t been in a fire, flood, or other catastrophe that would cause unseen damage, and the car hadn’t been brought in from another state (especially one that recently had some sort of catastrophe).

I returned home, referenced my “homework” on this particular car, and proceeded to craft an offer using the fax sheet option in my MS Excel program, and doing the actual faxing from the public library. I listed the specific car, the amount of money I was bidding, and the contingencies—a test-drive with spouse in tow, and a visit to my mechanic for a once-over. The dealer agreed, and we set a date to drive.

After hubby and I tootled through town, we stopped in to see what our mechanic had to say abut the car, and it was favorable. I was sure to use the “daughter going off to college in another state” question, and his answer was a resounding YES!

When the car was returned to the lot, the dealer took the keys back and made a counteroffer in writing. We re-countered the next day, and it was accepted. All we had to do then was show up and pay up, first offering 20%, then 10% less than the Kelley book value. With the second offer being accepted, I had managed to shave about $4,000 off the sticker price.

Later that week, we showed up with check in hand, signed the documents, and took possession of the keys—simple as that. No high-pressure anything, and the salesman said he was impressed, relieved, and wished more people would buy their cars this way. From there, we went directly to the mechanic for whatever work the car needed. After three trouble-free years, we sold it to a young sailor desperate for dependable wheels.

If I had to buy all over again, I’d do it in a heartbeat—through e-mails instead of faxes. There is much more information available on the web, including those pesky DMV reports—and they take credit cards too!

This Lazy Woman’s Used Car Buying Method (L-O-N-G)

The recent issue of GEICO’s insurance newsletter had a brief article on buying used cars and what you should look for. These things included:

• Crash test results from NHTSA
• Recalls
• Safety features
• Vehicle maintenance and VIN history
• Theft statistics
• Working order
• Ride

I’d like to tell you how Wenchypoo looks used cars in the mouth like gift horses. Before I even get near the car, I look up all the things that will earn me a discount on my auto insurance, like safety features, number of doors, what kind of horsepower will get charged for “sports car” rates rather than passenger car rates, which cars have the highest likelihood of theft (in parts or the whole car), and most importantly, make, model, and color are thrown right out the window—loyalty to one manufacturer or one specific color will only serve to shrink your world of possibilities needlessly. Let the initial shrinking be done through theft statistics, VIN history, and safety features—these things will serve to lower your insurance bill when it comes time to add a car to your policy.

If the VIN number is available online, I go to my local DMV and run it to look for things like flood, collision, lemon law recall, or shady title issues—this alone has saved me from buying “hot” cars from personal sellers numerous times. An immediate DMV report is usually available for a nominal fee—your local office will inform you of the prices.

If the car is listed for sale online, there’s another advantage: the Kelley Blue Book or NADA book for vehicle valuation—at either one of these places, you can look up the car in question and find out what it’s REALLY worth with mileage, options, condition, and model. The owner’s perception or the dealer’s idea of value may not be entirely accurate (and is usually way overpriced) for the condition the car’s in.

I try not to go to the actual lot or driveway until I have all the information obtainable about the car before getting close to it—this way, I’m not making myself vulnerable to the seller and any high-pressure tactics. If this means a CarMax report, I get it, but it usually doesn’t go that far. I highly recommend going online where you can look at vehicles for sale without having to subject yourself to starving salesmen—this way, you can collect information at your leisure: number of doors, any listed features or options, the occasional VIN number, and year/make/model for value verification. Personal visits to the car can be done on Sundays when the lot is closed.

If I happen to find a car that fits the bill, and know what it’s worth, here’s a tactic I use for selecting a car based on mileage: because my family drives less than 10,000 miles per year (an insurance discount cutoff), I use that number to compare to the year of the car. An example: a ’02 Ford Taurus with 72,000 miles on it—I would consider this to be too high mileage, meaning it doesn’t have enough life left in it for me. Here’s how I got there—10,000 miles (amount driven yearly) X a 5-year-old car = 50,000 miles, my mileage budget for an ’02 vehicle. Where or how this car was driven makes no difference to me—a mile is a mile, whether it’s highway or not. So-called “commuter miles” means the car was driven like an ox, and probably maintained like one, too (in other words, rarely saw a vet). To me, fewer miles mean more life left in the car, and this example Taurus is 22,000 miles over my budget. With today’s car-centric culture, you’d think I’d have great trouble finding choices based on my mileage requirements, but I don’t.

The car must also be 3 years old or older—by then, the bulk of the depreciation has fallen off, and I’m not likely to be upside-down in any financing, or suffering a huge loss of value.

Sticker price is a big bugaboo for me with dealers—they take a car in trade, pay half what it’s worth, clean it up, then mark it up to twice what it‘s actually worth according to Kelley. Only stupid people pay the sticker price, because they don’t bother to do the homework before going to the lot—this is how salesmen stay in business. I actually bother to look at the REAL value of the car, then start with an offer 20% below the true value. By the time I get through dickering, the car price has actually reached it’s true worth according to Kelley, and I didn’t get ripped off price-wise.

As far as working order, ride, and recalls go, that can be taken care of with a trip to the mechanic. No car is absolutely perfect, and every car should be taken to a mechanic anyway to assess the oil, transmission fluid, filters, belts, brakes, radiator, and tires—after all, you’re buying a USED car! Color can also be changed with a quick paint job, so this car can BECOME your favorite color, or at least a less objectionable one. If you are paranoid about the mechanical condition as a purchase contingency, then have a mechanic give it a once-over, then ask this question: would he/she feel comfortable sending their kid off to college in another state with this car in its current condition? If the answer is no, then the car has little mechanical life left in it, and has entered the nickel-and-dime stage of auto repairs to keep it going.

One more thing that might sway a car purchase: parts for imported cars are more expensive than domestic models—the parts as well as the cars have to be imported, and this takes time and money (namely yours).

I wouldn’t worry about crash test results because you’re likely not going to own this car long enough to care about it, and surely aren’t planning to get yourself into a crash anyway. “What about the other driver?” you ask—that’s something beyond your control, and that’s where safety features (namely air bags) can help make up the difference. People buy brand new cars all the time without regard to crash test ratings, so why would you hesitate when buying a used one?

Finally, there’s this little tidbit: the car you saw online or in the paper may not be available for sale when you actually get to the selling place—this is a common tactic used by dealers to attract shoppers. Dealers will advertise a complete steal of a car, and it miraculously vanishes when anybody comes in to buy it BECAUSE IT WAS NEVER THERE IN THE FIRST PLACE! Chances are very good that this car came in from an auction, got bought right away by a salesman, and will be fixed up and flipped at a later date (for a much higher price). This happened to my brother-in-law in Arizona over a minivan, and he took the dealership to court (and won his suit for fraud). This particular dealership had been advertising that specific minivan for weeks, and it never materialized—the dealer used this car as an ad campaign, and when he couldn’t produce it for purchase, he got taken to court. In court, he said they had the van briefly (long enough for photos, I bet) before selling it to someone else—yet he continued to advertise that same minivan! The moral of this particular story is never to limit yourself to one choice, for it may be a complete illusion.

Always have more than one selection in mind when it comes to actually seeing the cars in question—they may be “suddenly sold” and a high-pressure salesman may come pouncing, ready to divert you to another (unresearched) car—one with the highest profit margin. Have a list of possibilities, go visit each one (if available), and bid on the one you like best or actually had access to.

Go to the car seller with price in mind, and money in hand (or financing already lined up)-—they also make hefty profits on dealer financing). If they won’t cooperate with accepting your final offer, then simply walk out—nothing says you have to stay and be subjected to their brow-beating and arm-twisting. Nothing moves dealers more than someone with a check in hand and a firm, final offer—they’d rather sell the car at a small loss than have you walk out the door, never to return. What they fear most from you is bad publicity via word-of-mouth.

Money talks, and as long as you have the money to spend, you can make these lackeys be YOUR lackeys. Like home sellers and retail merchants, these people need to bend backwards to accommodate you, because you have something they want (money), and they want to make a sale. Never let them lose sight of that, and never lose control of the negotiations. Make them feel like they should be honored by your presence.

I myself had occasion to strong-arm a dealer—I named my final price for a car, the dealer told me that a little old lady at the next desk also wanted the car, and she was willing to pay a higher price. I picked up my stuff, stood up, and said, “Let her have it then,” intending to walk out. That sentence alone caused some more huddling between salesman and manager, and I got the car at my price, out the door (that means including tax, title, license, and registration). What put me ahead of the deal was the check I had in my hand—it turns out the little old lady needed financing, and the dealership preferred their money NOW. This forehand knowledge of the car, cash in hand, and “threatening to leave” tactic allowed me to shave $8,000 and $6,000 off my last two car purchase prices.

Next time, I plan to deal directly with the sales manager myself. I finally figured out that the salesman is merely a go-between for the manager (who has the real power) and the customer (who also has the real power). Never, NEVER be afraid to walk away when things get out of your control, and stack the deck in your favor with information about the car(s) before ever leaving the house. Homework alone is half the battle.

The Dark Side of Fuel Efficiency

With all the hoopla about global warming (even though it’s all unwarranted) and all the panic about the possibilities of $4.00-$5.00/gallon gasoline and $120/barrel crude oil, everyone in any official capacity is screaming about improving the CAFÉ standards for vehicle gas mileage—the rest of the nervous Nellies are screaming about hybrid cars.

You’d think the sky was falling or something!

For all the best efforts of California emissions laws, Los Angeles once again ranks as #1 in polluted cities. They don’t seem to realize it, but they are IMPORTING pollution from China by way of the jet stream. Now they want to be the torchbearers of the “Green Movement” by heralding higher emissions standards and raising gasoline miles-per-gallon minimums for car manufacturers because THEIR air and traffic are bad!

But there is a dark and sinister side to all this “efficiency frenzy” that isn’t being voiced, let alone discussed: taxes. For every gallon of gas we buy, the state levies a gas tax to help the general budget. If cars with better fuel efficiency were manufactured, then incorporated into our lives, we’d not only use less gas, we’d be paying less gas taxes—much to the woe of your state.

This, in turn, would force ailing states to jack up gasoline prices to make up for the gas tax revenue shortfall, much like what happened to the cigarette tax, and what is going to happen again to the cigarette tax through a recently-proposed child health care initiative. There would be little choice here—jack up the gas price, or jack up the sales tax on the cars causing the tax problem in the first place.

Never mind Saudi Arabia and OPEC, Hugo Chavez and Venezuela, Nigeria’s on-again, off-again political stability, or even Iran’s saber rattling. Never mind the hurricanes that can knock out our refineries for months, or the timely “seasonal fires” that seem to happen every spring just in time to knock supply offline, leading to gas spikes before the great college migrations south for sun—it’s our own government that can hurt us the most while we try to do good!

Higher emissions standards and higher mileage standards would serve to cause a near-instant jump to that proposed $4.00-$5.00/gallon gas and $120/barrel oil just by virtue of mandates for cleaner-burning (and more cleanly refined) product, coupled with the cars to run it. All those boutique fuels that the west coast uses currently would become the law of the land, and their current $3.95/gallon or so (average) would be considered a bargain.

Look at the great lengths some people want to go to for filling the tax coffers once again—and all in the guise of “doing good.” These are your gas tax dollars at work.

Better Cows Without Chemistry

Ivan Garrett of Wymore, Nebraska is my meat hero. As far as I know, he doesn’t produce organic meats, but what he does produce is many times more efficient than the average run-of-the-mill rancher clutching onto subsidies with both hands.

(Original article)

Instead of settling for the prescribed method of feeding his livestock according to the “national feed-efficiency” average like so many other ranchers, he does one better. Knowing that a great deal of money (otherwise known as feed) ends up on the ground as waste, he wanted to do better than the national efficiency numbers to cut the cost of his feed, and the amount of it that gets made into waste.

This is comparable to what the non-agricultural business world has been doing for years—using whatever means necessary to cut the most expensive cost, which is labor. Mr. Garrett’s “labor cost” was feeding his cattle, and he couldn’t exactly outsource or offshore this part of his enterprise. He didn’t want to resort to chemicals to fatten his herd for market—he felt it wasn’t necessary.

Through years of careful recordkeeping on herds, feeds and feed combinations, he was able to put all this data on spreadsheets and analyze exactly which cows put on the most weight fastest, how much feed it took, and with what type of feed. He was able to formulate a feed-to-meat ratio (if you will), and started culling out the herd members who had the lowest ratios when compared to the national feed efficiency numbers.

While the national average ratio was 8-10 lbs. of feed for every pound of gain, Garrett managed to reach a ratio of 6 lbs. of feed for every pound of gain—2 lbs. better than the average rancher. Those extra 2 lbs. of feed calculate out to big savings when multiplied over an entire herd and an entire calendar year. The “feed ratio” winners get culled out and bred over and over again until the entire herd becomes an efficiency machine, virtually assuring Ivan continuing savings in feed with every generation.

Mr. Garrett has a similar formula for cows—“For a cow to be good enough to be a producer of replacement stock, Garrett has a five-star plan:

•Most important, she must be fertile. If she can't produce a calf in 365 days, she's going to throw the program out of balance and is not worth keeping, he said. "She might be a good cow, but if she can't keep up, goodbye," he said.

•How did she do calving? If she didn't require any assistance, she gets a star from Garrett.

• After calving, she needs to be a good mother, protecting the calf, getting it up and moving, getting it to start sucking, in a wide range of environmental conditions. "Does she work for me or do I work for her," Garrett said. "If she's a good mother, give her a star."

•The most important thing in a calf's life is milk from its mother. "You can't take her in twice a day and milk her, so the calf has to tell us," he said. "We weigh the calf at weaning. If the calf is half of the cow's weight, we call her a perfect mother for milk production.

"Since there's no ‘perfect' cow, I back off to 45 percent for bulls and 40 percent for heifers."

It’s nice to see someone applying common sense to the problem of efficiency just like horticulturalists have done for decades—breeding for specific characteristics and weeding out the weak, instead of relying on science to cut corners for them. As we found out with genetic modification and corn, once the genie’s out the bottle, there’s no stuffing it back in!