Comparing apples to apples on gas prices

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Jerry Taylor and Peter Van Doren of the Cato Institute write that Americans shouldn't get their knickers in a twist over the price of fuel:

In truth, gasoline prices today are taking less of a bite from our pocketbooks than has been the norm since World War II.

For instance, let’s look at 1955, a year most of us associate with big cars, big engines, and cheap fuel – automotive glory days, as it were. Gasoline sold for 29 cents per gallon. But one dollar in 1955 was worth more than one dollar today. If we were using today’s dollars, gasoline would have cost $1.76 per gallon in 1955.

Gasoline now costs around $3.00, so we are worse off than in 1955, right? No. Because we were poorer in 1955 than we are today, $1.76 then had a bigger impact on the pocketbook (that is, it represented a larger fraction of income) than $1.76 today. If we adjust gasoline prices not only for inflation but also changes in disposable per capita income (defined as income minus taxes), gasoline today would have to cost $5.17 per gallon to have the same impact as 29 cents in 1955.

But what they don't adjust for is the amount of driving we do today compared to 50 years ago. While the post-war suburban building spree had begun, cities and towns were still fairly compact, families made do with one car, most shopping was done at neighborhood stores or shopping centers, children walked to school, and stores still made deliveries.

Although our vehicles are more fuel-efficient today, we do a lot more driving just to go about our daily business. We've had 50 years of construction based on the premise that everyone has a car and distance is no barrier in the search for more selection and lower prices.

For example, even 20 years ago, Wal-Mart had stores in towns like Pawhuska and Nowata, both about 30 miles away from the next nearest stores in Ponca City and Bartlesville. Wal-Mart believed that customers would be willing to drive that extra 30 miles to shop at a Supercenter, so they closed the stores in Pawhuska and Nowata.

Here in Tulsa, supermarkets, gas stations, and pharmacies have all trended away from smaller, ubiquitous outlets to fewer but larger locations spread further apart.

It may yet be that transportation costs for a typical family are a smaller percentage of after-tax income than in 1955, but Taylor and Van Doren haven't established that as a fact in their article.


astronaut of innerspace said:

WRONG! This is pin-headed thinking. Get the eye up out of the microscope and look up at the big picture.
Some time back, I did blog replys about the failed downtown library and how a library could modernize our court system. Then I went on my way. But now I am back. I will stay for a while and I may not be friendly to Batesline this time.
* Cars may NOT be more efficient today. It isnt what is available, IT IS WHAT EVERYONE OWNS.
* in 1955 Mom took Dad to work, got grocerys on the way back, took delivery of milk and maybe ice at the house, worked the garden, and the car sat there till time to pick Dad up from work.People lived near where they worked also. One family ,one car. Efficient and cheap.
* A lot less miles were driven. 10,000 miles a year. A car lasted 10 years and 100,000 miles on a car was a BIG deal.
* Transport costs may have been LOWER then than now. YES gas was higher inflation-adjusted then. BUT TOTAL TRANSPORT COSTS MUST BE FIGURED. Not just cost of gas. Example: new cars were less common then. Many people NEVER bought a new car. Cars were saved for and bought for cash. Loans were for mortgages, not for cars. So interest costs on borrowed money were WWAAYY lower. Insurance today is way high because of lawyers and lawsuits.
* The depression/war mentality of saving and conserving was in all peoples minds then. This is non-existant today.
I listed many flaws in the study.
And I am The Astronaut Of InnerSpace.

Dan Paden said:

We've had 50 years of construction based on the premise that everyone has a car and distance is no barrier in the search for more selection and lower prices.

Yes, we've just about doomed ourselves to a future of scooter-hood. It's going to take decades to effectively change the way cities are built, I think, and in the meantime we've still gotta get there. In my case, when gasoline hits 4 smacks per gallon, buying a scooter will pay for itself.

I'll still drive everywhere. I haven't got a whole lot of options.

Ain't that the truth.
I've started using Tulsa Transit to get to work on a daily basis.
Granted I will lose a lot of time sitting at bus stops and transfer points, but I will also be saving about $200 a month! For a citeewurkor, that's a large chunk of change.

Our bus system isn't the best, but it's better than nothing.

Paul Tay said:

I am patiently awaiting the day when Wal-Mart eats crow due to %10 gas. Meanwhile, it's Thurday. Checking the BEACH. Oh, BTW, Redneck Rickshaw is in the works. Hopefully, it will road test this weekend with a dead load, several stacks of UTW, a couple boxes of baby wipes destined for Baghdad Beach, and a life-sized, life-weight effigy of our fav blogger. YEP! You guessed it.

Joseph Wallis said:

Everytime you see one of these "things might seem bad but there were worse in year XXXX" just look at this as astroturfing by the oil industry. This is all propaganda to convince Americans they have it better than they used to and to just keep on driving those gas guzzling SUVs. If things were actually worse after adjusting for income and inflaction and blah blah blah then how come there wasn't dissent back in 1955 like there is now...especially since we were supposedly poorer back then.

Eventually the veil will be lifted that the propganda machine has created and America will see just how horrible a situation we are in.

Roy said:

When as a college student I first had a car, my minimum wage summer job took about 6 minutes to buy a gallon of gas (18 mpg for my 4 door sedan; I had traded up from my 185 mpg motorcycle).

Later as a professional it took me as low as 1 minute, 48 seconds for that gallon (22 mpg for the family sedan).

Currently semi retired, it takes me about 8 minutes of labor to buy that gallon (at 24 mpg for the family sedan).

S. Lee said:

Some cities have designated car pooling lanes on expressways. I'm waiting for a designated go-kart lane. Maybe not the best idea for ozone alert days; but great gas mileage (and a bucket of fun).

susan said:

I worked for a corporate office downtown Tulsa. Part of my "benefits" was company transportation and a company employee took me to work, and it was terrific.

When we were in Mass. last summer up north, I also noticed the carpooling lanes.

Chuck said:

Mike: You've got it right on the money when you're talking about figuring total transportation costs. This may in fact cause us to go back to the time of grocery and milk deliveries (inherent efficiencies there that I needn't outline), recycling (once energy costs get high enough, recycling makes sense) and other more earth-friendly behaviors.

astronaut of innerspace said:

Mean while I was still thinking. The song remains the same in that the AVG. AUTO-MFGR. FLEET MPG CANNOT be used even. Because people have O.D.ed and overweighted on SUV's for a decade. If YOU own one YOU ARE A MURDERER.
And even then, It is HOW THE AUTO's ARE DRIVEN. At a dead stop on the B.A is ZERO mpg.
From 41st to 71st on Memorial in 45 min. is 5 GAL PER MILE. ( NOT 5 miles per gallon.)
After 55 mph, the mpg is dropping like a rock. I drive 55 mph and EVEN AT $3 gas, EVERYONE STILL PASSES ME.
And this is not counting the fat @$$eS sitting at Sonic with the vehicle running with A/C on full blast, because the energy use PER GDP GAIN STILL KEEPS GOING UP. ( Example: to grow 1% we use 2% more energy units.)
And this starts to show how Ozone Alerts are B.S. Tell this to Hispanic lawn-care crews.
THEN in figuring total transport costs once again, like the gentleman above penciled about hours worked for a gallon, figure hours worked for a car purchase. It has spent a decade going out of sight.
Then figure the tax and fee load to drive a mile.
Sorry Cato pinheads, you are now engaging in junk science. I am more conservative than you.
The inflation adjusted price of gasoline has about as much to do with the cost of driving as the cost of hotdogs and icecream bars has to do with the cost of a day at Disneyland.
( It is outragiously overpriced but is only part of the equation.)
Cmmon Batesline, you are smarter than this.
And I am The Astronaut Of InnerSpace.

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This page contains a single entry by Michael Bates published on July 12, 2006 7:48 PM.

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