Spending on Gasoline Hits a 30-Year High

Good news! According to the U.S. Energy Information Administration, Americans had to spend only 4% of their pre-tax income on gasoline for their cars in 2012 -- a sum that hasn't increased since seven years ago.

Horrible news! According to the same U.S. Energy Information Administration, Americans had to spend a whopping 4% of their pre-tax income on gasoline for their cars in 2012 -- which works out to $2,912. That's the most dollars Americans have had to spend on gas at any time in the past 30 years.

Source: US EIA.

So ... which is it? Is this revelation from the EIA good news or bad news? Obviously, it depends a bit on how you look at it (and on which qualifiers you put inside the parentheses). For example, one way to put the EIA's figures in a positive light is that, if the dollars spent go up, but the percentage of income those dollars represent stays flat ... logically, this must mean people are earning more dollars from their jobs. So even if it doesn't feel like it for many of us, apparently, wages have gone up!

You can also take heart from the fact that, even if the dollar figure of $2,912 sounds bad -- "$2,912? Why, that's a couple of mortgage payments!" -- it could have been a lot worse.

According to the University of Michigan's Transportation Research Institute, improvements in fuel efficiency in American cars have improved fuel economy by 40% since 1970. What's more, nearly half of those efficiency gains -- 17.8% -- have taken place over just the past five years. Had they not, then Americans could easily have spent as much as $3,430 on gas last year. That would have been close to 7% of pre-tax income, and easily the most we've ever spent on gas, as a percentage of income, as gross dollars -- really, by just about any measuring stick you care to use.

Give 'em a hand
Rant all you want about the greedy executives at ExxonMobil (NYSE: XOM  ) and the $44.9 billion in profits they raked in last year, but when you look at those efficiency figures, the question of "who's to blame for us spending so much money on gas?" quickly switches to "whom should we thank for saving us so much money?"

Here, the obvious answer is: Japan ... and South Korea. According to TrueCar.com, which tracks the average fleet fuel economies of the major automakers, Honda (NYSE: HMC  ) , Nissan, Toyota (NYSE: TM  ) , and Hyundai currently score highest on average miles per gallon of the cars and trucks they produce.

However, Ford (NYSE: F  ) also deserves a round of applause. Among all the major automakers, Ford made the greatest strides in improving the fuel efficiency of its fleet last year. It added 2.8 miles per gallon to its car fleet, and an astonishing 3.4 mpg to the efficiency of Ford trucks.

And GM (NYSE: GM  ) , the oft-reviled "Government Motors," that supposedly kowtows to Big Government's Green Agenda? It was arguably worst of the lot. In 2012, GM was second-to-last in fuel economy improvements for cars, and dead last in trucks.

Worried about Ford?
If you're concerned that Ford's turnaround has run its course, relax -- there's good reason to think that the Blue Oval still has big growth opportunities ahead. We've outlined those opportunities in detail, in the Fool's premium Ford research service. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place -- click here to get started now.


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  • Report this Comment On May 05, 2013, at 8:41 AM, jeyebolt wrote:

    Rich Smith this was a foolish story. The consumer is also paying a lot more for the vehicle they and with higher earnings means higher taxes they pay, plus now you pay more sales tax on the vehicle. Our problem we have to much Greed on Wall Street that trade Energy.

  • Report this Comment On May 05, 2013, at 10:01 AM, bobthegoodone wrote:

    Since fuel economy hasn't really improved in the last 100 years who should we blame ? The first cars were getting 25 mpg !

  • Report this Comment On May 05, 2013, at 4:38 PM, TMFDitty wrote:

    The Model T got 25 mpg, yes, albeit it wasn't really comparable to modern automobiles.

    If you're okay with comparing apples and oranges, though, then according to the TRI, the average fuel efficiency of all cars in the US in 1923 (which is as far back as their data goes), was 14 mpg. By 1973, it was down to 12 mpg.

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