| FINDING DEAL$ ON GA$OLINE: |
Posted on 03/13/2008 8:14:09 AM PDT by Lazamataz
So gasoline prices are at an all-time high. But after adjusting for inflation, rising incomes and better fuel efficiency, how bad are they really?
The experts' answer: Bad. Nearly as bad as they've ever been, and not likely to get better anytime soon.
Adjusted for inflation, gasoline at $3.227 a gallon, according to AAA, is still about 18 cents below its peak of $3.405, set in March 1981, according to the Energy Information Administration. And Americans are spending about 6% of their total disposable income on energy, down from about 8% in 1982.
But prices are higher then they have been at any time in recent memory. In 2002, when many people may have bought a vehicle they are still driving today, Americans spent just 4% of their income on energy. Gas prices, adjusted into 2008 dollars, were at a near all-time low of around $1.30 a gallon.
"It really hasn't reached a level it did in 1982, but it's approaching it," said Kay Smith, an economist at EIA. "It's becoming a burden."
Moreover, Americans haven't spent this much of their income on energy since 1986. Except for a few months, inflation-adjusted retail gasoline prices didn't cross the $2 a gallon mark anytime in the 18 years between 1986 and 2004.
Now there are some studies that say it's not really that bad.
In 1980, the average American had to work 105 minutes to buy enough gas to drive the average car 100 miles, according to Beth Ann Bovino, a senior economist at Standard and Poor's. Now, the average American needs to work only 53 minutes, thanks to better fuel efficiency and higher wages.
"Even though it certainly doesn't feel so good at the pump, we're a bigger economy and we make more money," said Bovino.
And some people, usually Europeans, like to point out that gasoline is still far cheaper in the United States than it is in Europe, where it can cost upwards of $8 a gallon.
Others argue that's it's not fair to compare the United States and Europe, as Europe's high prices are largely due to taxes, which are then used to fund public benefits such as mass transit or cheaper health care.
Either way, most economists agree that these current record gas prices are beginning to take their toll.
For each penny increase in the cost of gas, U.S. consumers pay an extra billion dollars a year, said Dean Baker, assistant director at the Center for Economic and Policy Research. So to go to $3.22 a gallon from $1.74 a gallon in March 2004 is costing an extra $148 billion dollars this year alone.
"There's definitely a hit," said Baker. "It doesn't explain the recession, but it certainly adds to it."
Falling home prices and the loss of jobs are the main reasons behind the economic downturn, economists say.
But food prices have also risen with gas prices, as the economy worsens and investors of all stripes pour money into commodities as a hedge against inflation and the falling dollar.
Food prices rose nearly 5% in January, the highest one-month gain since December 1990, said John Lonski, chief economist at Moody's Analytics.
"It's a drag on consumer spending," said Lonski. "Consumers right now are suffering from a double whammy."
For those hoping things will get better, there may be a while to wait. EIA predicts gas prices will remain above $2.70 a gallon until at least 2010.
It’s going to be a painful summer and fall.
I am way more worried about what the Fed Reserve and Congress is doing than energy or housing.
| FINDING DEAL$ ON GA$OLINE: |
It’s getting to be time that we consider gas rationing. Truckers that bring us our food and keep the economy running get priority over pleasure driving. No trips to the beaches of CA and FL, in fact, no recreational driving, period. Every drop needs to be spent judiciously. This would break the oil market, but so what? Our enemies both foreign and domestic need to share in the pain that our economy is going to go through if nothing changes but the prices at the gas pump the rest of this year.
These a-holes say this all the time, hell who do they think they are kidding, most people working for the last 8 years are lucky to get 2% raise a year, not nearly keeping up with inflation. I'm sick of hearing this shiat and I have what is considered a good job as a programmer but I can't afford anything but gas and food now and I have a cheap house, a cheap fuel efficient car and no debt otherwise.
And, have you thought about all of the people whose businesses (and income) depend upon vacation spenders? Probably not, like most BAD decisions.
You sound just like a liberal who is afraid to let a free market economy sort it out.
part of the word s/b part of the world
rented card s/b rented cars
(stupid keyboard betraying my thoughts)
All being chilled or frozen 24/7 along the way.
Plenty of room for more efficiencies in our system.
Apples and Oranges. last I checked the size of America was slightly larger than some of these European countries.
I am glad we bought a high MPG Honda Civic (non-hybrid) when it was time to replace one of our cars. The extra price in gas is running us oh... maybe an extra $20 a month for a car that does an 80 mile round trip commute.
It’s getting to be time that we consider gas rationing.
____
Why ration, there is no shortage.
This is (I think) a short-term bubble in oil prices caused by cynical speculators who have lots of money to play with.
They will make their money and move on — or lose a bundle if they can't keep propping up the prices.
Either way the problem is temporary.
“Apples and Oranges. last I checked the size of America was slightly larger than some of these European countries.”
Some of our cars here in America are bigger than some European countries.
I am lucky in that I have a fuel efficient vehicle and so does my Mr. Between gas prices, food prices and natural gas for heating we are being squeezed dry. This is why retail spending is down- that and I don’t feel the need to give any company my money that only sells goods made in China.
The entire economy in our area, a tourist destination, would collapse, everyone would have to move away and the enviromentalists would then bulldoze it all down and declare it a wilderness.
Several comments: 1) Better fuel efficiecy - mostly by cutting size, passenger capacity, cargo capacity, weight and safety. Case in point, I downsized from a full sized Cadillac to a Honda Civic. The way I see it, my living standards have gone down. So this better fuel efficiency claim is not a very fair comparison. 2) Higher wages - bovine excrement. After adjustments for inflation, I'll bet most people's income has not risen. I'm NOT better off than I was 28 years ago.
My job is two hours (one way) from my home. Gas rationing...not good. I will be out of a job.
Gasoline? Not going to happen to this birthright.
Me neither, considering I was 13 and still living on Dad's wages, LOL. Ah for the days of no kids and responsibilities. Fact is, people's wages were pretty much keeping up with inflation back then I hear, not so today, something has to give sooner or later or the economy will stay in the tank.
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