Gas and nuts

The ‘nut’ in a family budget is the bare minimal amount of money that has to go out the door every period to minimize negative consequences.   It is the short term mostly fixed costs.   This concept of the nut is very important in thinking about presidential popularity and gas prices as I don’t think it is gas prices per se that can drive presidential popularity but the gap between the nut and total family income which has a strong influence on presidential popularity.  The post-nut gap is a more restrictive definition of income than disposable personal income.

In my family, the nut is the sum of the mortgage, gas, electric, student loans, car insurance, life insurance payment, food, gas for the cars, daycare, car loan, and bus passes.  If my family was only meeting the nut, life would be tough, and it would only work as long as nothing goes wrong.  It is a stressful life to have very little space between the current nut and total income.

I am fortunate.  Right now, my family makes significantly more than our current nut.  That means I can trade convenience for cash, it means that if my almost three year old needs a nap and won’t shut his eyes, I can take him for a drive so I can get a cup of coffee and burn $1.50 in gas without concern.  It means that when my six year old brings home the flier from her dance school about a summer ballet camp, the only constraint on her participation is if we have already committed to having her spend that week with Grandma and Grandpa.

Creating space between the nut and income makes life much more enjoyable and easier.  It makes economic growth and success feel real and tangible.

Creating space can occur by bringing in new income, although we are in an economy where wages are moving roughly at the rate of inflation and there is still slack in the labor market so big overtime hour are not available, or cutting back on the quasi-fixed costs.  Loan payments rolling off or taxes being cut is a way to decrease the nut while holding income constant.  Finally, the actual costs of the nut items could be reduced.  The two common reductions are lower interest rates on debt, especially variable rate index debt (although lower interest rates tends to be correlated with worse economic times) or through the reduction of gasoline prices as gas consumption is very inelastic in the short term.

So when gas prices go down and everything else is held roughly equal, gas consumption stays roughly constant for most people, but all of a sudden, they are seeing an extra $20 or $30 per paycheck that is now unclaimed by the nut…. and that money can be spent on the nice little extras of life or a good pizza on Saturday night.


31 replies
  1. 1
    eric nny says:

    Wait, nuts are how much now?

  2. 2
    mai naem mobile says:

    Almonds are one nut which have gone up in price. Pistachios also too. I filled gas up for 1.86 yesterday.

  3. 3
    Omnes Omnibus says:

    Sometimes you feel like a nut. Sometimes you don’t.

  4. 4
    Occasional Reader says:

    Someone could write a pretty great article deconstructing the plight of the middle class through the lens of the nut-income surplus (or lack thereof) over time.

  5. 5
    OzarkHillbilly says:

    Yeah, I remember those days. They aren’t too terribly far off again.

  6. 6
    Howard Beale IV says:

    Interesting take on how to handle expenses outside of savings. Nice thing is that my nut no longer includes an auto payment of $360/mo, so that’s a plus. I also telecommute and have a hybrid, so gas prices don’t affect me all that much. OTOH, Stone’s Arrogant Bastard Ale isn’t cheap.

  7. 7
    currants says:

    @mai naem mobile: $1.21 at Costco. (Though I haven’t put gas in yet–maybe I’ll get to that this week. Unless I need to fill up before I go that far.)

  8. 8
    Litlebritdifrnt says:

    My DH drives 200 miles per day round trip commute. He drives a very fuel efficient car but you can better believe that the low gas prices have a huge effect on our budget right now to the point that I can pay all of the bills on the first of the month and don’t have to worry about holding money back for his gas fill ups. It really takes the pressure off.

  9. 9
    srv says:

    With these gas prices, I can party like its 1999. And I don’t even own a car.

  10. 10
    Mike in NC says:

    A bunch of nuts threatening to run for POTUS? How is this news again?

  11. 11
    OzarkHillbilly says:

    @currants: Dayum. $1.78 here. And I feel like I am stealing it at that price.

  12. 12
    chopper says:

    So that’s why they call it “squirreling away money”.

  13. 13
    chopper says:


    $1.78??! Screw the milk, honey, Fluffy’s drinking unleaded from now on!

  14. 14
    Litlebritdifrnt says:

    @Litlebritdifrnt: ps. We are in SC right now and the gas price is 20 cents a gallon cheaper than NC you can bet we will be filling up his car before we leave SC.

  15. 15
    rikyrah says:

    you are right, of course.

    I have been actually filling my tank to ‘F” in the past couple of months. Before this, for the past few years, if I kept it at half-full, I was doing good. 3/4, awesome, but FULL? That’s felt like a luxury. Felt good to see it go to ‘F’.

  16. 16
    Debbie(aussie) says:

    We are paying roughly the same per litre ($1.20/l)as some of you are paying per gallon. Much cheaper than it was tho, at its height about $1.55ish.

  17. 17
    I'mNotSureWhoIWantToBeYet says:

    Indeed. I remember in grad school when I was literally counting every penny. It was “fun” to look back at old check registers and see how my handwriting degraded as I feared huge overdraft charges from potentially making a subtraction error…

    Too many people in power have forgotten what it is like to not have enough money, and to worry every single day about it.


  18. 18
    Violet says:

    @Litlebritdifrnt: State taxes can vary and make quite a difference in gas prices, but there can also be a crazy difference in the same city or town.

    I recently visited a friend who just moved from my neighborhood to about 30 minutes away. While I was out there she told me to fill up at the supermarket at the large intersection near her. Cheapest prices she’d seen anywhere. I needed to fill up anyway so I did. I think I paid $1.29 a gallon. That was two weeks ago. The station just down the road was 20 cents higher.

  19. 19
    p.a. says:

    although we are in an economy where wages are moving roughly at the rate of inflation and there is still slack in the labor market so big overtime hour are not available

    In any businesses/industries doing well that provide good bennies the OT may be booming. It’s cheaper than hiring and training people who will then qualify for benefits.

  20. 20
    Ruckus says:

    When I lived in northern Calif the most expensive gas station in the county was literally a stones throw away from the cheapest. If one bothered to look you could see the price signs of each station from the other one. The expensive one did a booming business. The cheap one did even better.

  21. 21
    Tenar Darell says:


    Too many people in power have forgotten never known what it is like to not have enough money, and to worry every single day about it.

    There, fixt.

  22. 22
    Matt McIrvin says:

    When you get enough money you can actually do things like buy cars with cash on hand and pay off student loans, which reduce the nut dramatically. Which is to say that the poorer you are, the more expensive living gets.

  23. 23
    Matt McIrvin says:

    This is also why Pigouvian moves like high gas taxes to control carbon emissions are never going to fly politically unless we have a dramatic leveling of income and wealth first.

  24. 24
    NotMax says:

    Still around $3.80 per gallon here, but that’s about a buck less than it was not all that long ago.

    BTW, tip from my mechanic: If you have one of those vehicles with a fuel pump inside the gas tank, avoid driving regularly with less than a quarter tank of gas. The gasoline in the tank acts to keep the pump from overheating and if the level gets too low for too long the pump can and will eventually fail.

  25. 25
    Gvg says:

    some of the differences in price are caused by when the store filled its tanks and what the wholesale price was that day. gas stations have big underground tanks a truck fills up and when the store needs a top up the retailer pays that day’s rate then has to make a certain amount back per gallon. Popular stations have to refill more often so their prices change more. ?the corner store seems to refill about once a week and if the timing is right they can be cheaper than Walmart for a few days or vice versa. I have also noticed the refills happen slower when the price is high because people try to stretcha tank further due to their own budget problems.
    the longer an owner has a gas station, the lower his cost on mortgage and such are compared to inflation thus he doesn’t have to charge as much per gallon to cover costs just like homeownership, it seems to get more affordable as time passes.

  26. 26
    Bill D. says:

    @NotMax: I understand that this arrangement is pretty standard this day. It also means that if you run out of gas your fuel pump is toast. You’ll need a new one, not just a full tank. It’ll cost quite a bit to get the tank off and open and the pump replaced.

  27. 27
    SP says:

    @Gvg: This is how I know whether gas is about to go up or down in the next couple days- down the street there are two gas stations, one a national chain that either has large tanks and buys several days’ worth or has some kind of negotiated contract, and the other a local station which buys on the spot market more frequently and only takes cash. At equilibrium i.e. when gas is not going to change for the next week, the local is about 10-15 cents less than the national. If it’s much lower than that, as it has been recently, the national will soon follow, and same if the local is equal or higher than the national. I remember around Katrina the local jumped about 75 cents the day before the national did so I made sure to fill the tank before the chain went up.

  28. 28
    Emily68 says:

    My big brag about reducing the nut: my husband and I both turn 65 this year. Being on Medicare will decrease our health insurance cost $700 per month. Thank you, thank you LBJ. I could have done without Viet Nam, but Medicare is GREAT. (Also thank you, Harry Truman.)

  29. 29
    The Gray Adder says:

    @NotMax: It also keeps condensate out of your tank, for those of you who drive in below-freezing conditions.

  30. 30
    Ultraviolet Thunder says:

    “Earning the nut” refers to circuses and traveling shows. They would come to a town and negotiate a price to rent the land for the event. To keep them from absconding without paying, the town authorities would require the show to turn over the axle nut from a wheel on their wagon. They couldn’t leave without ransoming the nut back. Hence to ‘earn the nut’ was to make the minimum required earnings to continue.

  31. 31
    Epicurus says:

    @Ultraviolet Thunder: Thanks so much for this! I love the origin of words and phrases in our language, and this one never made a lot of sense. It does now….

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