Posted on 06/19/2006 12:11:11 PM PDT by newgeezer
Today's gas prices are a bargain, compared to what they were nearly 25 years ago. And they're a bargain compared to other necessities, too.
According to the Bureau of Labor Statistics, the average cost of a gallon of regular unleaded gasoline in U.S. cities was $1.41 in April 1981. Excluding federal and state gas taxes, this meant the price was $1.26.
In today's dollars, that would be about $2.83 per gallon. But last month, the before-tax cost of a gallon of unleaded gasoline was just $2.29 - about 19 percent lower than that.
Given that we're living under much stricter air quality standards today than we were 25 years ago, that figure probably understates the real price reduction in gasoline prices.
In some areas of the country, motorists must use specialty fuels - the "boutique" fuels - to meet pollution standards. This adds to refining costs. As the Federal Trade Commission has noted, "Boutique fuels and differentiated access to gasoline supplies ... contribute to variability of gas prices."
And 1981 isn't the only year gasoline prices have been comparable to, or higher than, the prices today. Between July 1979 and October 1983, gasoline was fairly consistently over $2 a gallon. During much of the 1920s and 1930s, gasoline prices were higher than $2, too. In 1922, for example, the pre-tax cost per gallon was just shy of 25 cents - equal to about $3 today.
One part of our fuel bill has increased dramatically in real terms over the years: taxes. Adjusted for inflation, state and federal taxes on gasoline have increased by 868 percent since 1922 - they were only 4 cents per gallon back then - and by 50 percent since 1981, when they were just 14.5 cents.
But even with the recent rise in gas prices, gasoline prices are rising at a slower rate than many other necessities.
A half gallon of milk, for example, has increased in price from an average of $1.12 in 1981 to $2.09 last month. Milk prices have increased at a slower pace than inflation, but they've increased at a faster rate than gasoline prices. Milk prices declined in real terms by around 18.6 percent, perhaps aided by federal government subsidies that the Progressive Policy Institute says amounts to $3.32 for each of America's 9 million dairy cows, while gasoline declined by a slightly more robust 18.9 percent. Where are the critics of Big Dairy?
Bread prices also have increased relative to gasoline since 1981. The price for a pound of white bread has increased by 103 percent - about 8 percent less than the inflation rate over the period. Where are the calls for a windfall profits tax on the makers of Wonder Bread?
Moreover, the price of a first-class postage stamp has risen from 18 cents to 39 cents today - almost precisely keeping pace with the inflation rate.
Say what one will about gasoline: Whatever price you pay, it gets you where you're going. A postage stamp, on the other hand, won't necessarily get your letter delivered.
One needn't consult consumer price indexes to understand that gasoline isn't significantly overpriced. Consider, for example, how many Americans willingly pay $1 or even $1.50 for a 20-ounce bottle of drinking water. At $1, the price of that water is $6.40 per gallon - nearly 2.8 times the amount Americans paid for a gallon of gasoline last month.
If I'm not mistaken, water is the most abundant resource on the planet, it is not controlled by a cartel, its known reserves are not limited primarily to volatile areas of the world, and it requires substantially less refinement than gasoline to bring to market.
So my advice: Stop complaining about the price of your gas. Be thankful your car doesn't run on bottled water.
David Ridenour is vice president of The National Center for Public Policy Research (www.nationalcenter.org), a conservative, free-market think tank. This article was distributed by Knight Ridder/Tribune Information Services.
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[Emphasis added.]
Ignoring the tired "bottled water" comparison—since I never buy bottled water, that means nothing to me—the writer makes some good points.
Um...the price for milk and Wonderbread jumped because transportation costs jumped.
In 1972 the national minimum wage was $0.65 per hour, if my old brain remembers rightly. The price of a gallon of gasoline at the time was around $0.30 at local discount retailers (Jacksonville,FL). Today, in FL the minimum wage is $6.50 an hour and gasoline is near $3.00 a gallon. Seems everything evens out at X10.....................
Politically speaking, and pardon the language, but at what price were people pissed off? Convert that to todays dollars and I'm sure we're much higher than that. 8-)
Too, if people HAD to buy multiple gallons of milk every week, they'd be just as upset over its price.
I'm not saying it's all rational, but it does effect people's support of various public policies. The one thing I cannot figure out is how people support democrat policies of blocking energy production, then turn around and complain about the price of fuel.
In 1980, the average wage for a worker was $6.33, leaded regular gasoline cost $1.19. It took 10.4 minutes to earn a gallon of gasoline. It took more time in 1981.
In May, 2006 the average wage for a worker was $16.59. According to gasbuddy.com, the average price for gasoline is $2.86. The takes 10.3 minutes to earn a gallon of gasoline now. When you combine the improvements in mpg since then, it becomes even cheaper to drive to work today compared to then.
Consumer Price Index, Average Price Data --------------------------------------------------------------------------------
Why 1981? Why not 1969? Pick the right year and you can "prove" anything you wish. This constant repetition of a "bargain" leaves me singularly unimpressed.
Repeating the same faulty claim over and over simply makes it a tiresome exercise.
One minor thing. He says the average price of milk is $2.09 a gallon. Where? I usually pay $3.34 a gallon around here. I can do without milk but not without gas.
I'll just say it's been a long time since I've seen a 6-pack of beer for less than $1.68.
This whole argument is stupid. Yeah, sure the price of staple goods is more expensive/inflates faster than gas, but I ask, Who needs to buy 10-15 gallons of milk in a week? Or 10-15 loaves of bread?
If we could get buy with 1-2 gallons of gas a week, then $3.00 gallon would be nothing to fret over. The fact that we have to consume gas at a much higher rate and quantity than similarly priced staple goods refutes this whole argument.
I don't think I drink water at rate my vehicles drink gas.
It would require something our schools have not taught for a long time -- namely basic math skills -- for many people to follow that, so it will be gerenally ignored. Thanks, public edumacation!
Excellent FACTS! Again, though, they require basic math skills (namely noticing that 10.3 is about equal to -- and in fact a little less than -- 10.4) for people to grasp, so again, it will be ignored...
PS I'm not referring to your average freeper here, but rather to your average public-school educated voter, particularly libs.
That may be true, as long as people don't live much further away from work.
Don't confuse people with a lot of facts. If they want to bitch about the price of gas, that's what they'll do. That's how demagogues get elected, pandering to malcontents.
Right. And I tire of the news stories that compare gas to milk. When was the last time you had to put 15 gallons of milk into your car?
unfortunately this price rise has done NOTHING to get poor people off the roads
it's just as congested as ever
FWIW I do a weekly check on the interstate around Indianapolis on my commute, and when I drive at a steady 5mph over the speed limit 90%+ of traffic passes me.
Only speed governed commercial trucks and seniors are slower, LOL
I don't think I drink water at rate my vehicles drink gas.
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