So I was watching a movie from the early 1960’s and noticed a gas station in the background with gas at 32 cents a gallon. To adjust for inflation from the early 1960’s to today’s money you multiply by 7 meaning the adjusted price of gas in Texas being bought by Paul Newman in Hud in 1962 was $2.34. The price of gas in Huntington Beach being bought by Ron St. John in 2008 is $1.64. What happened?
I don’t like statistics spoon-fed to me by someone with an agenda so I used multiple sources and a choice of once every ten years for as far back as I can go, and used the CPI figures off the BLS site to come up with a history of gas prices, resulting in the following:
1920 – .30 (adjusted for inflation $3.41)
1930 – .20 (adjusted for inflation $2.70)
1940 – .18 (adjusted for inflation $2.92)
1950 – .27 (adjusted for inflation $2.58)
1960 – .31 (adjusted for inflation $2.33)
1970 – .36 (adjusted for inflation $2.10)
1980 – 1.25 (adusted for inflation $3.38)
1990 – 1.13 (adjusted for inflation $1.88)
2000 – 1.49 (adjusted for inflation $1.96)
My beef is that when the price of gas spikes upward the media treat it like a disaster/crisis as if we’ve been invaded by a foreign army, and every business-hating left-wingnut gets hysterical about ‘greedy’ oil companies. Then when reality intrudes and prices prove that the market does work, and if anything technological improvements tend to make the commodity cheaper over time in real terms. But the silence is deafening over ‘news’ like this and some other crisis du jour dominates the headlines.
Well when you consider that salaries have fallen when adjusted for inflation, then you can understand how gasoline has become a larger proportion of actual income. THAT’s why $4/gallon gas hurts so much.
And where the hell are you getting gas for $1.64 a gallon? More importantly, are you sure it’s gas?
Sorry anon, salaries have risen when adjusted for inflation over the last 40 years. In addition, cars are much more fuel efficient than they used to be.
http://en.wikipedia.org/wiki/File:Household_income_65_to_05.png
There’s been a slight uptick in price last week, from $1.69 to $1.79 at the station near my house. Of course, that doesn’t mean much when some are predicting that the price could go lower than $1 by Easter. The deflationary recession has begun.
RonJon, where do you get this stuff from? Seriously, where? I’d love to make a lot of cost comparisons then and now. So is it a constant figure you use, or is it a logarithm that adjusts for the periods of recession and inflation? Like its been in the 1-4% range recently but it was in the 20% range in the late 60’s. I can’t wait to learn this trick.
What “technological improvement” has affected recent gas prices? The recent fluctuations in prices just highlights the fact that “market forces” really have nothing to do with the price of oil. The sooner we wean ourselves off oil the better we’ll be.
Why are you wasting money on gas, St. John? The Arco at Warner and Springdale is 1.59.9.
what!! said:
“The recent fluctuations in prices just highlights the fact that “market forces” really have nothing to do with the price of oil.”
OMG – that is one of the most idiotic statements that I have ever heard.
what!! also said:
“The sooner we wean ourselves off oil the better (off) we’ll be.”
Double OMG – That is one of the most brilliant statements that I have ever heard. I agree!
Caveat – “wean” would not include a $5 per gallon tax on gas and it would include electric vehicles plugged into power supplied by nuclear.
junior, OMG please explain the market forces that drove oil up to $144.00 dollars a barrel and back down to $40.00 dollars, was it really supply and demand or was it speculation by investors?
Travis,
The stats you refer us to are for household income. The picture for personal income over time is much less positive.
In addition, gas at over $4.00 a gallon FAR outstrips any income gains, even when adjusted for inflation.
I don’t remember which site I used for the actual gas prices since 1920, but the inflation adjustment came from CPI figures for L.A. County off the Bureau of Labor Statistics.
Speculation by investors is part of how the market works in responding to changes in supply and demand. The two are not mutually exclusive.
BTW, the price of gas will probably go up again. The dollar is starting to drop against the Euro and there’s a rumor that oil companies are unloading supply to avoid some year-end tax on inventory.
But the ‘greed’ of oil companies is pretty much a constant, and a market economy vs. a centrally planned economy means that geniuses like you and me do not sit around ‘deciding’ when its time to ‘wean’ off of something. Millions of separate decisions work together to create a price and you decide what is important to you.