Tuesday, May 29, 2007

Gas Prices are not high - stop whining already!

Okay - gas at the pumps is now about $3.50 USD per gallon. Seems steep right. Well, it's not really out of line. Sure in 1980, gas cost only $1.13 per gallon. That was 1980 people!!! You could also buy a house for under $100,000 and a car for under $8,000. In inflation adjusted figures for 2005, the real price was $2.86 (based on US Census figures for inflation adjusted prices). In 1955 gas was only $0.27 per gallon. In a time where a brand new house AND car could be bought for under $10,000, this would be the same multiplying the whole equation by ten. Hence Gas goes from $0.27/gallon to $2.70 per gallon and the car AND house goes from $10,000 to $100,000 USD. If you think gas is to high at $2.70 per gallon, consider your range of options for buying a new house and car in the US for under $100,000. Can't really to it. the US national median house price is actually about $220,000 as of August 2005.
If you raise the price of gas to be in alignment with housing and new automobiles, it should be around 2.2 times the $2.70 in terms of 1955 inflation adjusted dollars or approximately $6.00 US per gallon. Coincidentally, that seems to be what many other countries pay.

On top of that, the US has one of the lower prices for gas at the pumps world wide. See this graph to see how really upset people would be if placed in a country like Norway where gas is over $6.00 USD per gallon. Us Canadians have been paying $1.35 per litre at the pump (approximately $5.00 USD perUS gallon). The Dutch pay $6.48 per US Gallon!

The price of gas has largely remained stable over the last 40 years and in terms of inflation adjusted dollars, has not become a luxury. Yes - in the last few months we have witnessed US prices that appear to almost approach the median price the rest of the world pays but we have not yet even seen the USA get into the expensive half of the chart. In short, the US still has some of the cheapest gas in the free world.

Also - consider that higher prices might have positive effects. Perhaps even less people on the roads in their own cars, more people car pooling or sharing. If higher prices make people think, let's think about how we got into a position where the gas and oil companies have the power to unilaterally raise prices over us and screw us in the pocketbook. We got ourselves into this position by becoming Dependant upon it in the same manner drug addicts feel the financial wrath of their dealer.

What I would really like to see? I would like to see a real Energy policy in the USA. The US an dCanada could lead the world in alternative energy innovation and use if the right people take control. Get rid of the brats who still falsely consider Hydrogen as a viable terrestrial energy storage device and start real research into the net energy capabilities of new systems. My great Uncle Stig runs the world's largest and cleanest bio-mass energy conversion plant in Finland. We shoudl be doig the same here. The California wind energy policy is a good move. Solar works.

And I would like to see more people stop and think before winging on about how costly gas is. it really isn't.


  1. Can't really see what the problem is? In Norway (where I am from), we now pay more than $7 per gallon and I don't think that's much?

    I much prefer to commute or use my bicycle than driving a car, but I guess that's not an alternative many places in the US?


  2. Duane,

    Of course they need to moan, because not only is the gas(petrol) "expensive" but their cars are also massively less efficient. So over here in the UK we are just under the £1 a litre mark ($2 US a litre) which is around $7.5 a US Gallon, but we have cars that are good to drive and have decent fuel economy. Oh wait, that just makes it worse.

    The best conversation I had on this was on a train in the UK where an American "explained" to me that the reason prices were lower in the US was because they had their own oilfields and refineries... when I pointed out that the UK was less dependent on imports and had extensive refinery capacity it elicited the response "Oh".

    The reason people (IMO) in the US moan about Gas prices is that they don't view it as a pollutant but as a requirement, as soon as its seen as pollution then it will be less about cost and more about impact.

  3. Yeah - I prefer to skateboard, bike or walk. I would even rather walk to downtown than take public transit on a nice day. I drive a massively non-efficient car (Twin Turbo Porsche) but have only logged 6,500 km in the last 18 months. Livibility is just as important for city planners. In San Jose, CA and Charlotte, NC, there are places where you must have a car to get to and from unless you run through freeway traffic. By contract, San Francisco and New York are both great walking cities.

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