Posted on 08/31/2005 11:34:55 AM PDT by JZelle
Nationally, the average price for regular gasoline around $2.50 per gallon. Are gasoline prices high? That's not the best way to put that question. It's akin to asking, "Is Williams tall?" The average height of U.S. women is 5 foot four. For men, it's 5 foot 10 inches. Being 6 foot four, I would be tall relative to the general U.S. population. Put me on a basketball court, next to the average NBA player, and I would be short. So when we ask if a price is high or low, we must ask: relative to what? In 1950, a gallon of regular gasoline sold for about 30 cents; today, it's $2.50. Are today's gasoline prices high compared to 1950? Before answering, we have to take into account inflation since 1950. Using my trusty inflation calculator (www.westegg.com/inflation), what cost 30 cents in 1950 costs $2.33 in 2005. In real terms, that means gasoline prices today are only slightly higher, about 8 percent, than in 1950. Up until the recent spike, gasoline prices have been considerably lower than 1950 prices. Some Americans demand the government do something about gasoline prices. Let's think back to 1979 when the government did something. The Carter administration set up price controls. What did we see? Long gasoline lines, if the station hadn't run out of gas. It's estimated Americans used about 150,000 barrels of oil per day idling their cars while waiting in line.
(Excerpt) Read more at washingtontimes.com ...
"Seeing Carter on tv made me ill. OK?"
But you're advocating the second coming of Carter's energy "policy," and that doesn't make you ill?
Is that you, Paul Krugman?
The industry has fought for additional refinery capacity for years... and been turned down. They have asked to drill off Florida and been turned down. Alaska? NO. Nuclear? NO. Coal Plants? NO. Now, along comes China and India sucking up available resources and its big oil's fault? I don't see it.
Then you are probably not old enough to remember the first gas crunch when the price of gasoline essentially doubled overnight. Before the current run-up (Katrina), I was paying $2.50. OK, it's basically jumped to $3, but it ain't $5 yet.
"Now, along comes China and India sucking up available resources and its big oil's fault? I don't see it."
It's the fault of Big Environmentalism, which is looking more and more like the bastard child of Big Socialism.
Don't you just love a handy, negative connotation that's so easy to come by, just by describing anything you disapprove of as "Big?" I myself am upset about Big Vegetarianism driving up the cost of Beano (not) LOL.
Some corrections:
Using MY trusty inflation calculator, what cost 30 cents in 1964 costs $1.81 in 2005. In real terms, that means gasoline prices today are significantly higher, about 66 percent, than in 1964.
A couple of other points:
What the hell motivate economists to try to tell us we really aren't paying more?
"Using MY trusty inflation calculator, what cost 30 cents in 1964 costs $1.81 in 2005"
And what is so significant about 1964, other than conveniently supporting your contention? Want to try 1980?
You're comments are unbelievably naive.
The gas lines of the 70s were not caused by full serv vs. self serv, or the number of gas stations. There was self service in the 70s and the full service stations with lines had plenty of staff to keep all of the pumps busy. There were also less people and less cars to go with the smaller number of gas stations.
The problem is that stations would run out (for days at a time) and people would stack up at the remaining stations. The dirty little secret is that gas stations don't actually make the gasoline, they only distribute what is delivered from refiners.
If prices had been allowed to rise, people would have adjusted habits, investors would have increased production, and the shortage would have been short lived. In fact, after Reagan eliminated the stupid price controls, that is exactly what happened. The prices rose to over $3/gallon (in today's dollars), the problem went away, and prices fell again.
The old inflation rule-of-thumb (circa 1980) was that consumer prices doubled every 7 years. Inflation was a significant factor in from 1965 through 1979, so that multiplier effect is probably high when you factor in the relatively low inflation years since then.
It gets really crazy when you try to put a value on products that didn't exist, or are radically different than they were 40 years ago. Compare a 2005 Lexus with a 1964 Coup De Ville. Both are cars, but a price comparison is practically meaningless.
"But real wages (adjusted for inflation) have not gone up much since 1973"
The 77.4% increase in disposable income since 1973 is considerable, contrary to your undocumented assertions. A virtual doubling of our spendable money is a whole lot to me.
Disposable Personal Income Chained to 2000 USD, per U.S. Department of Commerce here: http://www.bea.gov/bea/dn/nipaweb/TableView.asp#Mid
1950: 8,306
8,408
8,534
8,802
8,757
9,177
9,450
9,508
9,433
9,685
1960: 9,735
9,901
10,227
10,455
11,061
11,594
12,065
12,457
12,892
13,163
1970: 13,563
14,001
14,512
15,345
15,094
15,291
15,738
16,128
16,704
16,931
1980: 16,940
17,217
17,418
17,828
19,011
19,476
19,906
20,072
20,740
21,120
1990: 21,281
21,109
21,548
21,493
21,812
22,153
22,546
23,065
24,131
24,564
25,472
2000: 25,698
26,236
26,596
2004: 27,230
The price of regular gasoline in 1964 was actually $0.30. That is the same number the economist used for 1950. What's so hard to understand about that.
The price of regular gasoline in 1980 was $1.19. That's not the same as $0.30.
These prices are listed in the link I provided.
The real question is why the economist chose 1950 instead of 1964 where the price was actually $0.30. My answer would be his inflation calculation works out much more favorably for him to weave his tale by going back to 1950 instead of 1964.
Here's a couple questions for you, do all commodities have the same inflation rate? Why not?
In 1980, the average American's inflation adjusted annual disposable income could buy 180 barrels of oil.
In 2005, the average American's inflation adjusted annual disposable income can buy 400 barrels of oil.
In 1980, disposable income per person was $16,940.
In 2004, disposable income per person was $27,230.
(Constant 2000 dollars)
In 1980, a barrel of oil cost $94.
In 2005, a barrel of oil costs $68.
(Constant 2004 dollars)
As we dance to the socialism tango... Sorry, it just reminded me of a song I was taught in high school.
Actually, it's the possibility of increased profits that motivates producers to invest in producing more.
If prices were high because the oil was expensive, I'd have no problem paying $3.00/gallon. That's not the case, however. Prices are high because the market has to buy their product, so the oil companies can force people to buy it.
Nope, wrong! When prices rise, people use less, unless the price is not particularly significant. We'll know that prices have risen to a significant level, when we see significant adjustments being made by consumers.
I support a Windfall Profits Tax. And don't give me the "troll" garbage. I've been here since Sept. 2000. The simple fact of the matter is that these oil companies are on the way to actually derailing the American economy. 100 years ago, when coal strikes threatened the American economy, the military seized the coal mines and ensured the uninterrupted supply of coal. We need to do the same for oil now.
Who cares how long you've been here? If you think like a commie, you're a commie. The free market invariably solves these kinds of problems better than government intervention.
So gasoline prices have fluctuated of over the last few decades, and they are relatively high, right now. So what? Get over it.
If you think gasoline costs too much, use less of it.
When I was poor, and gasoline was expensive (back in '75), I drove a beetle (infrequently), worked in a filling station (where I got a discount), lived close to work and school, and rode my bike a lot.
Here are some suggestions for you. Stop commuting in an SUV. Quit driving 30 miles at the drop of a hat. Maybe you should try the bus.
Curiosity causes me to ask, how was that .30 price derived? Was that the "prevailing rate", do you know what kind of formula they use to come up with that price? As I recall in that time period there was a phenomena that was occurring on a very regular basis called "gas wars" was this factored in? Any consumer who was at all savvy in those times watched for them. I know that my parents did and I also know that they seldom payed the going rate for gas because of it. I can remember on several occasions in the 60's that we payed .03 cents a gallon. This was obviously before so many states outlawed selling below cost. We no longer have the benifit of these "gas wars" because of the state laws.
Thanks for the advice. Though most of it doesn't really apply to me.
When speaking with people I know, the cost of gasoline having reached $3.00/gal and apparently heading toward $4.00/gal strikes most of them as high.
I haven't run into too many people such as yourself that don't seem to mind. Perhaps your just an optimist (always on the sunny side) and just don't like to hear anyone complain.
In case I wasn't clear in my previous posts my gripe is with the economist/author:
Thanks for the advice. Though most of it doesn't really apply to me.
When speaking with people I know, the cost of gasoline having reached $3.00/gal and apparently heading toward $4.00/gal strikes most of them as high.
I haven't run into too many people such as yourself that don't seem to mind. Perhaps your just an optimist (always on the sunny side) and just don't like to hear anyone complain.
In case I wasn't clear in my previous posts my gripe is with the economist/author:
4.99 in Atlanta
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