High gas prices are costing an average Utah family an extra $170 a month, exceeding that family's monthly savings and discretionary income, according to a Wells Fargo report released Thursday.
Wells Fargo economist Kelly Matthews studied average family incomes and gas prices and determined that in May 2008, with gas prices averaging $3.80 a gallon, a Utah family is spending $471 a month and $5,655 a year on gasoline. That's 5.9 percent of a family's income, and a huge increase from the past eight years, where gas costs have hovered between 3.3 percent and 5.2 percent of a family's income. In May 2005, for example, families spent $3,596 a year on gasoline, about $300 a month.
"I don't believe the typical family has an extra $170 to absorb that," Matthews said. "At $3.80 a gallon, I think we have actually passed the tipping point where consumer budgets have to be adjusted."
In Sheri Wirth's household, pleasures such as taking her family to Lagoon, eating dinner in restaurants or a night at the movies have been cut back.
When she first bought a mid-size diesel sedan in 1999, diesel was 99 cents a gallon. Now it's $4.80 a gallon, and Wirth, an Ogden resident, takes a combination of FrontRunner, TRAX and buses to get to work at the International Center near Salt Lake City International Airport. At $145, a Utah Transit Authority monthly pass is much cheaper than the $300 a month she estimates she would pay in gas.
Her commute takes two hours and 20 minutes in the morning, and 1 1/2 hours in the afternoon, she said. "My employee lives in the Avenues and drops me off" at the intermodal hub, which saves time.
Utahns have paid more in the past for gas. In May of 1981, Utahns paid 8.1 percent of their income in gas. They also made less money in those days an average of $25,780 which adjusted for inflation in today's dollars would be $61,527 in real income.
Wells Fargo obtained the income figures, which represent married joint returns, from the Utah State Tax Commission. However, the commission hasn't released income figures for 2007 and 2008, and Matthews estimated that Utahns' average household income was $93,361 in 2007 and $95,850 in 2008.
In some years, family incomes have gone up 10 percent, but Matthews was conservative in estimating income increases in 2007 and 2008 because of the economic slowdown. Jobs have been lost and companies are not raking in huge profits. Taxable income also includes any stock sold, but since the second half of 2007, no one has made any money in the stock market, he said.
Gary Sessions of Clinton enjoys dinner and the theater with his wife. But high gas prices forced him to cut back.
"Something's got to give," he said. "It's costing more to fill the tank."
Lisa Scadden of Syracuse has decided not to take a family vacation this summer.
"We usually go somewhere, driving to California or up the Oregon coast, and we are not going to do that this year," she said.
In addition to cutting back on long-distance driving, Scadden has also cut back on short-distance driving.
"If I have to run to the grocery store, I walk," she said. "Or I try to consolidate errands."
Scadden's new behaviors to save fuel reflect what Matthews suspects: that people are simply cutting back on driving. If a family spends 5 percent of its income on gasoline, they could only purchase 1,261 gallons. At 21 mpg, they will drive 26,500 miles a year, compared with 36,700 miles in 2005.