Wise Money Decisions

Fifteen years ago I had a friend that would drive across town to save 5 cents/gallon on gas.  With a 15 gallon tank, he saved 75 cents per fillup. 

With gas at $1/gallon he probably came out ahead financially, although just barely. 

When you account for his time he came out behind, even though there’s no way his time was worth more than $4.25/hour.  Trust me, I knew this guy.  $4.25 is generous.

When you get older your time becomes more valuable.  There’s an inflection point in the value of your time when driving across town for cheaper gas is no longer a wise money decision.

But today was an exception.  I saw gas for $4.99/gallon at a station in Redwood City. 

FOUR NINETY-NINE!

How can they charge $4.99 when it’s $4.35 at a station not far away?  I don’t get it.  I think the guy put up $4.99 as a joke, but people still came in.  So he left it up.

Generally it’s not worthwhile to drive to a cheaper station.  But when the discrepancy is 65 cents, and especially when you can buy en route, go for the lower price.

By the way, have I ever mentioned that Redwood City has the country’s best weather, proved conclusively by government climatologists?

A month ago I wrote about the $2/bag skycap fee at American Airlines.  At the time I thought American was out ahead of the industry, charging more than everybody else just like with the $15 fee for checking a first bag.

But it turns out Delta is one up on American.  I flew Sunday morning out of Salt Lake City and paid $3/bag to skycap.  The gentleman at the skycap helpfully pointed out that the $3 goes to Delta and not to him, just in case I didn’t see the sign that said the $3 fee didn’t include a tip. 

So I paid him another $1/bag, for a total of $16 to check 4 bags.

Was it a lot?  Yea. 

Was it worth it?  Probably not. 

But it saved my pregnant wife and me a short walk carrying a lot of bags, an extra wait in line at the check-in counter, and the risk of missing our flight (we had arrived late at the airport, as always). 

Maybe it was worth it.

But the story doesn’t end there.  My $16 bought me a precious piece of knowledge worth oh so much more than $16.  The skycap guy pointed out that had I checked in online I could skycap my bags for no fee.  I wasn’t sure I heard right so I asked him to clarify.  Apparently it’s true.  If you check in online before you leave for the airport, you can check your bags at the Delta skycap for no fee.  Be a nice guy though and still pay a tip of at least $1/bag.

I usually check in online.  I didn’t this time because I was at my brother’s house and his printer was broken so I couldn’t print the boarding passes.  Maybe I’ll see if I can bill through the $16 to him.  Just kidding Rob.

I mentioned the broken printer to the skycap guy, and he said you don’t even need to print out your boarding pass.  Just check in online and skycap your bags for no fee. 

I am operating under the assumption that it only works with Delta, until I hear of other airlines doing the same.  If you are aware of other airlines’ policies, please leave a comment.

One of the unanticipated blogging difficulties I’ve had is deciding what to do when I’m traveling or on vacation.  I faithfully read a handful of blogs and it’s always a disappointment when there’s no new post.  I don’t like the idea of being the source of that disappointment for someone else.  I would like to let my readers know not to expect posts for a week or two. 

But my mother would be aghast if I broadcast to the world that my house is uninhabited and undefended for the next two weeks. 

It’s not like I own anything valuable.  Let me put it this way.  Do you remember a few years back when the grand prize for all contests was a 60-second shopping spree at some store in the Midwest?  Well, if I sold you a 60-second shopping spree through my house for $100, I’d likely come out ahead. 

But even so, why let 0.000023% of the world know that I’m out of town?

So if you have any bright ideas how to handle the blogger’s travel dilemma, I’d be happy to hear about it.

Now we return to our regularly scheduled programming…

After United and US Airways announced that they would charge for a second piece of checked luggage, several airlines followed suit.  Every airline I reviewed has implemented the charge except Southwest and Hawaiian Air.

The extra charge may not apply if you purchased your ticket before a certain cut-off date.  For example, on Continental you can still check a second bag free if you purchased your ticket prior to April 5, 2008.

If you fly roundtrip and check the second bag on both legs, the fee applies twice.

Below is the updated table for domestic flights in coach/economy class according to each airline’s website.  Note that international and preferred/Medallion class passengers may fall under different rules.

By the way, the coveted award for “Jeff’s Favorite Background Image for an Airline Website” goes to Hawaiian Airlines.  It’s beautiful marketing.  When I see it I have urges to book a flight:

We had plenty of time to kill at the airport a couple weeks ago. 

My 2-year-old wanted to spend it doing escalators.  We couldn’t find a pair of up and down escalators next to each other.  Instead we found a down escalator next to a flight of stairs.  When I finally dragged her away an hour later I had done enough stairs to increase my actuarial lifespan by a few years. 

I had lots of time to get to know the other people on my flight.  One guy told me he had booked a ticket on ATA a few weeks ago.  Hours after he booked, ATA announced it was ceasing operations and filing for bankruptcy. 

My first thought was, “You book a flight and hours later the airline goes bankrupt.  You’re hexed.  Don’t stand close to me.”

My next thought was, “I hope you read my blog and know you should book airline flights with a credit card.”

He had indeed booked with a credit card.  He called the credit card company to ask how to get his money back.  They told him they had advance knowledge of ATA’s announcement and avoided charging it through.  His got his money back on the spot.

It’s nice to see that something I wrote about actually works in the real world!

A Lot of People Have Worthless Airline Tickets Right Now

There are a lot of people holding worthless tickets right now.  According to the Atlanta Journal-Constitution:

Five U.S. discount carriers have either declared bankruptcy or gone out of business in the last two months: Frontier, Aloha, Skybus, Champion and ATA, a unit of Peachtree City-based Global Aero Logistics.

If they didn’t book with a credit card, they will next time!

I received the following notice:

“Please be advised that most major airlines have increased the change fee on nonrefundable tickets from $100.00 to $150.00 on domestic tickets and from $150.00 to $250.00 on international flights.”

When I have time I’m doing up a table of all major airlines with a link to their change fee.  Much like the baggage check table (which, by the way, needs some updating with the recent changes by most airlines to charge $25 to check a 2nd bag…. update coming soon).

Two weeks ago my family rushed to the airport for an early Saturday morning flight.  We were running a few minutes behind but we weren’t worried.  “There can’t be long lines at the luggage check-in on a Saturday morning,” I thought.

We walked into the terminal and saw at least 50 people in the American Airlines line.  We only had 45 minutes until our flight was scheduled to leave.  There was no way we were getting through that line in time. 

Plan B

I considered my options.  I wondered if I could sneak into the much shorter preferred check-in line. 

It didn’t seem promising since a guy was posted at the entrance to the line saying, “This is for preferred check-in only.”

Plan C

Our next thought was to ask if we could go to the front of the line since we were out of time.  It seems like the airlines used to do this, but I haven’t seen it done much lately.  Plus I hate asking for special treatment. 

Plan D

So we hatched a different plan.  I waited in line while my wife went back outside to see the line for skycap.  The skycap line was short, so we took our luggage outside and got through skycap in 3 minutes. 

We rushed through security (not easy with a 2 year old), rushed to our gate (literally the furthest gate), and found out our flight was delayed 5 hours. 

Nice.

Skycap

Years ago it seemed most airlines didn’t charge for skycap, but a $1/bag tip was expected.  Now it seems the $1/bag is more along the lines of a fee than a tip.  I usually tip on top of the $1. 

American Airlines charges $2 per bag for skycap.  It’s definitely a fee, not a tip.  The sign says so. 

Read the rest of this entry »

When I bike to work I pass two gas stations.  One was selling the lowest grade at $4.01 this morning.  It’s the first time I’ve seen the low grade above $4.  The other had low grade at $3.91.  Guess which one I frequent? 

It’s a trick question.  I don’t frequent either.  I go as infrequently as I can.  The weather’s nice and I’d rather bike to work.

A few days ago I pointed out that gasoline accounts for 70% of the average gas station’s revenues, but only 30% of its profit. 

Now I have additional data to offer.  According to the U.S. Energy Information Administration most stations receive only 7 to 10 cents per gallon sold.  That’s their revenue.  After expenses they’re left with a just a few cents of profit per gallon sold. 

Where Does the Rest of the Money Go?

Here’s the breakdown  for a $3.04 gallon of gas, according to the Energy Information Administration:

Crude Oil

More than two-thirds pays for the crude oil.  It’s the reason that gas prices go up when oil prices go up. 

Saudi Arabia can produce a $110 barrel of oil for as little as $1, while a U.S. company drilling in the Gulf of Mexico might spend as much as $70 to produce one barrel.

Taxes

The taxes vary depending where you live.  The average state adds 22 cents of gas tax, while the federal government tacks on another 18 cents. 

Guess which lucky residents of which lucky state get to pay the highest state tax?  Here’s a hint, it starts with ‘C’ and ends with ‘alifornia’.  According to the American Petroleum Institute, California adds 45.5 cents per gallon.  Yikes. 

If you’d like to see your state’s gasoline tax click here.

Ship and Sell

This includes the cost of moving the gas to gas stations via trucks or pipelines.

Refining

Refining is the process of turning crude oil into gasoline.  Refining companies have to buy crude oil at market prices.  Their bottom line is hurt by high oil prices.

Conclusion

When I buy a gallon of gas most of the money goes to the oil producers.  The U.S. oil companies do very well with high oil prices, but it’s the Saudi Arabias of the world that make a killing because of their rock bottom production costs. 

The corner gas station makes a few cents per gallon.  That’s less than 30 cents when I fill up the Accord. 

When I was a kid I filled up my lawn mower a few gallons at a time.  It must have barely been worth the wear and tear on the station’s pump - except it was worth it because I bought so many baseball cards at that station.

I figured it was only a matter of time.  The ink is barely dry on the new United Airlines and U.S. Airways policies to charge a fee for a second checked bag.  And now more airlines are following suit.

I haven’t been following this story closely so I don’t know if my list is exhaustive, but I’ve seen Delta, Continental, and Northwest announce a second bag charge.

The baggage section of Delta’s website still shows two free bags.  But the Atlanta Journal Constitution reported on March 24, 2008 that Delta will charge a $25 fee starting May 1.

Continental makes it very clear on their website they’re charging $25 for a second checked bag starting May 5, 2008.

Northwest’s website also shows a $25 fee for the second checked bag, although it was harder to find.

I hope the javelin policy doesn’t change.

Let’s suppose I’ve booked a flight on American Airlines.  I want to know how many bags I can check.  I know the answer can be found at the American Airlines website, but I don’t want to navigate through their site.  So I go to google.com and type:

how many bags can be checked on American

The American Airlines website pops up first and I find my answer. 

Right?

Not So Fast

Actually, the American Airlines website doesn’t show up until hit #91.  It doesn’t even show up on the first page unless I’m set up for 100 hits per page.  And then it shows up at the bottom.

That means there are 90 sites discussing how many bags can be checked on American that are presumably more important than the American Airlines website. 

Including such internet heavyweights as Cranky Flier, the Luggage Security Coalition, Air Gorilla, a page about the O.J. Simpson trial, a site about hiking the Inca Trail, a guy posting a comment on a bulletin board about sunglasses being stolen from his checked luggage on a flight from the Dominican Republic, and a site explaining why it’s a good idea to write the date on plastic bags before you put food in the fridge.

Which site supplanted American Airlines in the #1 spot?  Click here to find out. 

Post Script

If I’m not in the #1 spot, I was when I wrote this.