This graph helps to understand that. The price of oil denominated in gold. Look how much flatter the price is over the last 3 years vs. the price in dollars from the article.
Posted on 10/17/2012 9:11:35 PM PDT by GLH3IL
Gas prices are spiraling through the roof like never seen before. People often point to specific years that gas was so cheap, in an effort to blame politicians, Big Oil, or whomever else is the flavor of the day. Indeed, a gallon of gas was going for only a quarter of a dollar in the years after World War I, and even less than that before and after World War II.
But the key fact that’s missing from all the ranting and raving is the rate of inflation. The simple definition of inflation according to Wikipedia is: “A rise in the general level of prices of goods and services in an economy over a period of time.” Keep in mind, that at the end of World War I, average annual income was only $1,500. Currently, annual income is around $50,000.
For this exercise I plotted various sets of data in graphs — sometimes combined — based on information compiled by the U.S. Department of Energy’s (DOE) statistical office, the Energy Information Administration (EIA). The purpose of this two-part segment is to provide a clearer understanding of how much the price of gas has actually gone up relative to a family’s budget and other household costs, and most importantly, during what time frame.
(Excerpt) Read more at consumerenergyreport.com ...
I was very disappointed once gas went over 29.9/gal.
Lowest I ever saw was 17¢/gallon one day in Tulsa. I asked my Mom: “What’s a gas war?”
I’ve seen gas in that range as a kid, but I was buying from my pay when it was in the 25-29/gal range. $3 for a fill up sounds about right.
Looks to me like we are in one of four historical peaks in gas prices.
In previous recessions, the price of oil dropped. But our failure to recover has allowed China to bid up the price in order to fuel its production lines and the millions of cars that are now beginning to crowd its streets. Liberals don’t a damn thing about the oil industry. Barry is ignorant even by their low standards.
In 1952 I was paying 13.9 cents per gallon!
Glad it wasn’t higher, my street racing 40 coupe with 4, 97 carbs only got about 4 miles per gallon, but it went 126 in the quarter.
We also have to factor in the value of our dollar. Oil prices are set in dollars since it is the reserve currency of the world. When QE1, QE2, and QE? were put into place the Fed created more dollars. Why don’t people understand the consequences of this?
If there are more dollars and I have oil - is it not logical to demand more dollars for my oil?
Our politicians and central bankers are going to ruin us while they claim they are trying to save us. There are many factors that determine the price of oil in the world market, but people must understand that the basic value of the dollar decreases when you print many more of them. The faith and credit of the United States “insures” the value of a dollar outside our borders. Our credit rating was downgraded and world confidence that we will get our fiscal house in order is at an all-time low. These things matter. These things impact the price of a gallon of gasoline.
Indeed. The Fed has cheapened the dollar and so the oil producers are demanding more of them for the price of all. Wonder how much gold has flowed out of the country?
The prior peaks coincided with a dramatic drop in worldwide production due to the iranian revolution and iran/iraq war (1980 spike), and a dramatic increase in demand in china following years of double-digit economic growth. Over the past four years, there has been no such defining event... The world is in a recession, demand is slowly rising, as is supply. This spike is more similar to 2008 than to 1980, but is occurring during a tepid global economy. That will get the peak oil folks to pay attention, but I’ve always thought the peak oil argument was a red herring anyway in a free market, as once oil becomes too expensive to extract, alternatives will become more economically desirable. The reason that has not happened has everything to do with the fact that at any time the producers could open the spigot and ruin alot of investments in alternatives!
“What’s a gas war?”
Ah, the good old days. By today’s definition, it’s the activity which Obama is engaged in to get rid of big evil oil companies and the equally evil automobile.
When we had gas wars in KC years ago, gas would go down to $.19 a gallon from its previous high of $.21. In the late 70’s on Monday morning I would fill up my two kids cars and mine. Total cost for all three would be around $30.00. Yesterday I filled up one car with a smaller tank for $43.00 and that was with $.10 a gallon off discount.
I remember when I got pissed and quit buying gas at Standard Oil (now BP) when they raised the price from 30.9 cents/gal to 32.9/gal.
Still don’t buy their gas.
In 1956 i was making 1.50 an hour and was paying .18 cents for a gallon of gas, i believe that is about 8 and one third gallons of gas for 1 hour work.
I now make 17.00 dollars an hour and buy gas for 3.80 which figures almost 5 gallons of gas for one hour work.
loss of over 3 gal of gas per hour of work.
Yep, I’d be more than happy to fill up my old Suburban for $12.
In 1952 I was paying 13.9 cents per gallon!
Glad it wasn’t higher, my street racing 40 coupe with 4, 97 carbs only got about 4 miles per gallon, but it went 126 in the quarter.
I bought gas in 1952 for a model a truck which i was trying to make money hauling to the newspaper recycle warehouse, my younger brother quit and started selling news papers so i quit and went to setting pins in a bowling alley.
I don,t remember the price of gas.
I would say that people who look at the early part of the graph as some sort of reference, ie. “Gas hasn’t really gone up that much over time”, are making a big mistake. In the early years, cars, fuel, and so on, were all “new technology” and an emerging / developing market. Once the technology and market have matured and somewhat stabilized, then you have a more reasonable baseline to work from.
What is “simply true” is that for the last few years, the growth of demand has largely outpaced the growth of supply. If Toyota succeeds in its recently announced goal of making a $3000 car for 3rd world markets, then “you ain’t seen nothing yet”. Obama can wave his magic wand to double fuel efficiency standards, but the technology to do this in cars people (especially in this economy) can actually afford without gov’t subsidies, or will actually want to buy, is nowhere close to existing. Barring some tremendous technical breakthrough, there is only so much you can milk out of improvements in efficiency. As with most anything else, for the $$ spent, eventually you run into the point of diminishing returns. This is particularly true of mature fields of design, and automobile engine design is a pretty mature field.
IMO, Obama would not understand simple engineering and engineering economics precepts and constraints if they were explained to him for 20 years straight...
Note that I am by no means opposed to development of improved fuel efficiency, nor do I think one cannot get anything more out of that horse. I have faith in the engineers that there is still SOME room for improvement at a moderate price. But in the big picture, this will have little effect on gas prices.
(As an aside, one might wonder why, if economical technology to achieve a doubling of mileage ratings is not close on the horizon, why would the automakers accept such a mandate? My guess is that A) The automakers have little choice and in some cases are pretty much owned / controlled by the Gov’t or Gov’t henchmen (GM, for example). B) They can now safely assume they are “too big to fail”, therefor when things go badly, the Gov’t will do the same insane (to most of us) things it did the last time the auto industry was in trouble, and continues to do in some cases. These “insane things” will likely include direct subsidies of over-expensive vehicles, perhaps another push to remove older vehicles from the market, ramp up punative emissions standards applied to older vehicles, and so on.)
Anyway, there is no way in heck, short of even deeper recession than we now have, that worldwide demand for oil is going to ease. Obama’s attempts to “fix” the demand side will be a literal drop in the (oil) bucket, and might even backfire.
The “obvious answer” is to increase supply, but Obama can’t have it both ways: If you want to decrease CO2 emissions (a separate argument - see my tag line) then you can’t increase the supply of fuel, or mitigate fuel costs. (Obama must have been stabbing greenies in the heart in the last debate, if you follow his statements to logical conclusions!)
Great question for Obambi: If you want to decrease CO2 emissions, then how can you be for increasing the supply of gasoline? Of course, someone might throw that at Romney, too, so I hope he’s been briefed on the current Wikipedia page on Ice Ages. The next one (we may have prevented), to be specific...
Now, we should “drill, baby, drill”, for a host of reasons, but that is probably NOT enough by itself to do more than soften gas price increases. (Obama has failed at even that.) But, the more relevant point here is that global demand is just growing too much for U.S. production to do more than soften those price increases. So, then what?
Well, for one thing you roll back the regulatory structure to allow someone like Honda to produce again something like the CRX 1.3 or the CRX HF, at an inflation adjusted price of $8000 (1984). I still own a 1.3 (not running anymore, unfortunately, but I keep hoping to find some kid mechanic who could revive it at less than a fortune in cost!) My 1.3, when it had 100k miles on it, got a measured (by me) 65-70 mpg on the highway, about 48 mpg overall, had VERY low emissions, and was a quite comfortable car for 2 adults, even on long trips. As a commuter car it was even more ideal. The car was light, true, but it was so manueverable and sure footed that the only time I ever felt unsafe in it was when I had to accelerate rapidly. Engines HAVE improved since then. (Wind ‘er out, baby!!!)
One can make the blends transitions in spring and summer more sensible, so shortages do not occur, causing price spikes (and great joy to gasoline speculators.)
Better yet, however, would be to convert as much of our transportation fleet to natural gas as possible, as quickly as possible, while expediting more production. We have huge reserves of natural gas, and if we want it, that is where a good part of our inexpensive transportation future largely lies, in the next 50-100 years. This is one place where a large gov’t. program to accelerate the conversion would make sense, as it would almost immediately repay itself by improving our balance of trade, as well as spurring the economy.
Maybe Gov. Romney could expand on some of these ideas in the next debate...
:-)
This graph helps to understand that. The price of oil denominated in gold. Look how much flatter the price is over the last 3 years vs. the price in dollars from the article.
These charts completely ignore reliance on gas...which is something you have to ignore if you want to tell the story this person wants to tell.
It’s like when liberals scream about cars today having the same gas mileage as the Model T - to make that narrative work to their point, they have to ignore fuel efficiency.
Wait a minute. I don’t believe this for a minute. In 1961 gas cost under $.50 and I earned $2.00 per hour at a carwash which was then the minimum wage. That represented a 4 to 1 ratio. Today gas is $3.70 and the minimum wage is $7.50 I believe. That is a 2 to 1 ratio. In other words I would have to work twice as long to buy the same amount of gas.
I don’t know who figured out this stuff and what his agenda is but you can make numbers say whatever the hell you want them to.
Not buying it!
People talk a lot these days about gold, but I don’t think anybody ever filled the tank with eagles.
But up until 1965, while the dollar was officially “backed” by at least some gold, the dimes, quarters, and halves weren’t “backed” by anything, they didn’t need to be, they were made with 90% silver.
While direct comparisons can’t necessarily be made, it is inescapable that your $1.50 an hour job translates today to about $30 an hour, at least that’s the buy price for silver coinage right now. A silver quarter is “worth” about five bucks. So the question is of course, did the price of gasoline go up, or did the dollar go down?
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