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Percentage of Income Spent on Gas Doubles in Past Five Years

August 06, 2008

SANTA MONICA, Calif. — Less than a year ago, the national average price for regular gasoline was $2.96 per gallon. Many consumers simply wrote off monthly fuels costs as a mere annoyance. Those days are over, according to a new study from Edmunds.com.

The online information and research firm's data shows that, with gas prices at $4.06 per gallon (the average national price for regular fuel on July 21), there are 60 vehicles in the new-vehicle market that cost consumers more than $100 per fill-up.

In a separate analysis, Edmunds.com also calculated that the median household is spending 11.5 percent of its income on gasoline expenses, up from 4.6 percent five years ago.

"Gas prices are rising much faster than household incomes," said Jesse Toprak, executive director of industry analysis for Edmunds.com. "The result is a difficult situation in which consumers must alter their driving habits or make other sacrifices in their lives."

A specific example is as follows: A family owns a fuel-thirsty 2008 Nissan Titan XE (14.3 miles per gallon) and a relatively efficient 2005 Chevrolet Impala (22 mpg). If each vehicle is driven 15,000 miles in a year, a household with the median U.S. income for 2008 will spend $587 per month on gasoline, or 14.6 percent of its income.

"The $100 gas tank is a daunting psychological barrier for many consumers," said Philip Reed, Senior Consumer Advice Editor for Edmunds.com. "Even drivers who need their big trucks and SUVs may start to reconsider their purchase."

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