The Backwards Economy
There's certainly no arguing that taking to the road this year is going to cost more than ever before. As illustrated in a previous article, fuel costs have increased as much as 40% over the last 12 months. And even though pump prices are starting a slow decline, the burden of higher travel costs is going to take a big bite into the road trip budget this year. While many RV travelers are resolved to the inflationary costs of travel and are budgeting accordingly, others are talking about taking the most direct route to their winter destinations to minimize fuel costs, or canceling the trip all together this year.
But wait - economists are warning America that the increases in gas pump prices are nothing compared to the expected elevated costs of home heating fuel. Some are predicting that by the time the hard winter season arrives, the cost of heating your home could double over last year's costs.You do the math. Take an average size three bedroom home for example. If it cost an average $400-$600 a month to heat last winter, it could cost an average $800-$1,200 a month this year. Of course, to what extent natural gas prices will increase by the time winter season sets in is pure speculation. While the worst scenario has heating costs doubling over last year, others say a more moderate 35%-40% increase in price is more realistic, meaning a $400 natural gas bill last year will increase only to an estimated $560 this year.
Did someone say "only"? Over a four month period that adds up to an extra $640 in natural gas costs to heat your home, giving validity to the argument that increased pump prices could easily be offset by a savings in home heating expenses. There you have it: Catch 22. Stay at home or hit the road, it's still going to cost you more this year over last regardless whether the RV ever moves out of the garage or not. Wisconsin's WXOW TV says: "Rising fuel costs are going beyond the gas pumps. Energy experts say home heating bills in Wisconsin could rise 35-percent this winter. State officials predict families requesting assistance with heating bills will go up 22-percent.
Even before Hurricane Katrina, prices were expected to increase at least 18-percent. But now, officials say the rising costs of natural gas is nearly impossible to predict." MSNBC reports: "At a time when the energy industry is typically busy building stockpiles for winter, Hurricane Katrina knocked out roughly 10 percent of U.S. oil refining and natural gas pipeline capacity. About half that damaged infrastructure will take at least a month to restore, according to the industry’s preliminary estimates. That means it's all but impossible to predict just how high winter heating bills will go."
And if you are thinking perhaps you'll use the fireplace a little more this year, you should be aware that the demand for and price of firewood has gone up. And the amount of firewood is in short supply. In Vermont, for example, green wood already costs about $170 a cord, which is roughly $30 more a cord than last year. Dry wood is selling for as much as $170 a cord. Many firewood suppliers are out of dry wood and now are selling green wood, or they're already turning customers away.
Even without the burden created by the Hurricane Katrina disaster, fuel oil and heating prices are going up. And if you're thinking you could save money by staying at home this year, the thought may be more wishful thinking than reality.
So get ready to hit the road and enjoy! Life is just more expensive. Live it while you can.