BOSTON – I was driving in the car last week with my youngest daughter when she commented on the high price of gasoline. She's 12 years old, and she has heard her share of grumbling at the pump, but with gas now beyond $3 a gallon in our neighborhood -- it passed that level a while ago elsewhere -- she sized up the impact of rising energy costs in a very simplistic way:
"This would be really bad, Dad, if you drove the car a lot. You're lucky that you don't."
What she missed is the same thing that most grown-up consumers seem to be missing as gas prices soar again. It's not just the price of gas that's up, but the price of virtually anything that requires energy in production or that requires transportation to be delivered.
While people are complaining about pump prices -- and the media keeps focused on the gas issue -- they need to notice what's going on in the produce section of their favorite grocery store or in the aisles of the hardware store.
They get down to the simplistic level of my daughter's thinking, namely that the way to counter higher gas prices is simply to drive less. The problem is that many consumers can't drive less. It might be their work hours, family commitments or simply that they don't live in an area conveniently served by public transportation.
So when they are facing an extra burden in their fixed costs through higher gas prices, they have little choice but to keep on trucking.
My daughter asked me how those people who drive a lot might "make back" the money they are losing at the pump and I asked her to think about it and to come up with ways our family could, say, get back an extra $50 a month in expenses.
She's no financial expert, but she came up with some interesting ideas. They included: using coupons, buying in bulk -- she noted that you not only save money but gas, since you would make fewer trips to the store -- eating out less often, riding her bicycle instead of asking for rides and only buying what you need and then using it until it's done.
That's as good a list as most personal finance experts are tossing around these days, and a bit more creative than some.
But it highlighted a point to me, which is that the way people respond to the hardships created by higher gas prices will have common themes, but will be unique to each individual.
Stories on the national news of people pawning valuables and heirlooms to get the cash needed for a tank of gas show a level of desperation that most consumers can't relate to. Feeling a pinch and deciding to take a walk in the park rather than blowing a wad of cash for an afternoon at the movies is something that might fit in with a lot of lifestyles.
Responding to rising gas prices is not so much about driving habits, as it is about spending habits.
If the higher fuel bills are making you edgy and nervous, track your spending for a month, watching where the money goes. Look at both fixed and variable costs; it might be possible to save money by changing telephone plans, for example, thereby reducing what might be considered a fixed cost.
Better still, dig out your bills from a year ago at this time, when gas prices were dramatically lower then they are now. Retrace your financial footsteps at that point to see by how much not only your fuel bills, but your other costs have risen.
Subtract your old expenses from your current ones and you will have a good idea of just how much spending you need to cut to get back to the levels you could stand when gas prices were lower.
In the end, higher prices call for a bit of creativity, which is better applied before the increase in costs creates a sense of desperation.
Louis Rukeyser, 73
For years, I was no fan of Louis Rukeyser. Perhaps it was that I was of the wrong generation, or that I found money and economics interesting without the need to groan at bad puns.
Over time, however, I came to realize the good that Rukeyser did. In 30-plus years of hosting Wall $treet Week on public broadcasting stations, Rukeyser conveyed an appropriate sense of importance for the subject matter. While the man himself may have been an acquired taste, you came away from an encounter -- whether on television, in print or in person -- realizing that you needed to get a better grasp of what was happening in the world and how it was going to hit your own pocketbook.
Rukeyser died Tuesday at age 73 from a rare form of cancer. He left PBS for CNBC in 2002, and stopped broadcasting his own show when he took ill the next year. I didn't realize that I would miss his contributions until they were gone.
No matter who in the mass media you rely on for financial advice, they owe a debt of gratitude to Rukeyser for blazing the trail. Personal finance and economics journalism is diminished by his death.
Copyright (c) 2006 MarketWatch, Inc.