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Tuesday, April 7, 2009

Banking energy costs

The other day I was reading a comment over on The Oil Drum that I thought was an interesting idea. Basically, the reader was banking the money that he should have spent on oil prices if they had stayed at market prices from last summer.

So, for example, you use the high of $5.20 per gallon of gas (the reader had set a floor for energy prices at $4.00 per gallon, so this is flexible), what you would do is save the difference for what you are actually paying now, like the $2.20 per gallon at my nearest gas station. For example, let's say I filled up with 10 gallons of gas at $2.20. Compared to last summer's $5.20 a gallon (in some areas of CA), I would put that $30 difference into savings.

What do you do with the money you save? Well, use that money to invest in energy saving upgrades for your house. Or save towards a more fuel efficient form of transportation. The reader had managed to save enough from gas, heating oil and propane, using the high of last summer's oil prices as the baseline, to purchase a tankless hot water heater for his home.

I thought this was an interesting idea to take advantage of current low fuel costs yet forces a saving program to help with future energy costs. Is this something you would be interested in doing or are you just happy that oil costs are dirt cheap right now?

9 comments:

LimeSarah said...

I think that's a really good idea, but since I don't drive, the effects of oil prices are a bit more spread-out for me. It affects the price of everything else, but unless I kept a much more exact budget than I do, I wouldn't know exactly how much I'm saving. I will check out how much less our heating oil is this time; we're getting a fill-up today.

Cave-Woman said...

Up until recently we did something like that...

We were creating a "car replacement fund" so that we could get a more fuel efficient vehicle for those times when a good car is invalueable.

We have donated my old car to a charitable source, and now live with my husband's vehicle . We walk or bike to work most days and are constantly finding ways to use our vehicle less and less. ( I was doing really well with this, until my bike was stolen. Now I am more of a pedestrian. *sigh*)

The money we were saving from not driving as much, not having to pay insurance on an extra vehicle, or put aside money for upkeep for that older vehicle went into the "new vehicle fund".

Unfortunately all of that money got zapped up in medical stuff for my Mom----but I'm glad we had that money to give when the time came.

Carmen said...

We've been able to save up some $$, partly do to lower oil prices. Lower oil prices do not just affect you in the gasoline department - it also has a very strong effect on food prices.

We are seriously thinking about putting up PV solar electric system right now. Has anyone out there done this? Any advice?

Carmen

Glenn said...

This is an interesting idea,but implicit in it is that the higher fuel cost is not taking money from something else.

For some, when prices on gas (or any other essential item, like food, medical, utility payments etc.) go up, discretionary spending goes down. Fewer movies, or dinners out. So, when the price of gas drops, there is money to be re-utilized. In this case, the money can be thoughtfully saved or committed to future green projects.

For many many others, though, this isn't realistic. During the time that the gas prices really spiked, food bank usage also rapidly increased. Granted, some of that food bank increase was due to the bad economic situation in general, but it also reflects the zero-sum game that budgeting is.

The cost of gas dropping may not allow savings, but would mean that a family is less dependent on a food pantry or is able to fill a prescription again.

sunflowerchilde said...

This is a great idea in general, at least for those for whom money burns a hole in their pocket and they feel the need to either spend it or have something to save for.

My husband and I are fortunate to have two good jobs and we live well within our means, so we already save most of our money anyway. We share a car, and both commute to work with alternative transportation (bike/train), so we only need the car for certain errands and weekend trips, which means we didn't spend all that much more when gas prices were high.

Also, we're renters, so we can't do any major energy upgrades for our apartment, but if we ever bought a house, I'm happy to know we have savings to pay for these things.

Jennifer said...

We essentially do that, as everything left in the bank after we are done for the month goes in the savings account. We are very happy that the amount has increased substantially from last year!

Carrick said...

That's a fantastic idea. I've already put that extra money into savings since I'm basically on a needs-only budget, but it's an interesting idea to put it towards something like carbon offsets.

However, the economy being what it is, and with my panic about the prospect of living only on savings in the near future, even though technically I would have spent that money anyway, because I have it, I'm reluctant to give it up. I suppose that seems selfish, but then again it's also selfish to just rely on unemployment...

Anonymous said...

It would be a great idea, but my husband's hours were cut at his new job, so any savings with gasoline have been negated by the reduction in income. :( Deb in MA

Rosa said...

I kind of do that anyway - in general we keep all our expenses low, and then I don't work as much, and use the extra time to walk the kid to daycare, or raise my garden, or whatever. "I can't afford it" is a pretty effective way to stay on the narrow path.

I saved up for my first bike by getting a free bike, then every time I biked instead of taking the bus I put $1.50 into a jar, and at the end of the summer I had a couple hundred dollars for a good bike. It helped that I already didn't have a car to suck up all my money, though.

I really like the idea of not driving or turning down the heat, and putting that savings toward something that will save you even more money later - but like a lot of posters said, if you're already spending more than you make, you just cut back where you can to make your basic expenses.

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