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May 18, 2004

Quitcherbitchin'!

Dad, I love ya, but . . . .

You and your friends need to take a deep breath, and then shut the hell up about the price of gas.

Adjusted for inflation, gas costs LESS now than during the 60s. Yes, tracking long-term trends, the prices of oil, gas and electricity are falling, not rising.

As a matter if fact, if prices were adjusted for inflation since the 1920s, we’d be paying more than $10 a gallon. Don’t forget, unless we adjust for inflation, everything is more expensive than in days of yore. Did you know that adjusted for inflation, TVs and refrigerators are substantially cheaper than in the 1960s? To discuss the price of anything without adjusting for inflation is a meaningless exercise.

Gasoline prices paid at the pump have been on a steady decline since the 1920s, with the obvious exception of the 1970s, when we faced an OPEC embargo and gasoline lines. In 1920 the real price of gas (excluding taxes) was twice as high as today. Electricity prices were about three-times higher 75 years ago.

According to the U.S. Energy Information Administration, the all-time highest price for gas was in March 1981, when prices at the pump shot up to the equivalent of $3, in the aftermath of the Iranian Revolution and the outbreak of the Iraq-Iran War.

Further, as with all manufacturing processes, there are costs associated with making a product.

The reality is that demand for gasoline had increased over the years, even with the increase in average mileage of passenger vehicles, mainly due to an increase in the number of cars on the roads — a function of the increase in population.

So, more drivers, requiring more gas.

Demand goes up, so manufacturers increase production to meet demand, right?

Except that due to a combination of EPA regs and NIMBY-assed kvetchers, the number of new refineries built in the U.S. in the last 20 years is. . . .

Wait for it. . . .

Zero.

We have done everything we can to ensure that demand outpaces supply.

And while we’re talking supply, we’re sitting on top of HUGE oil reserves that Congress refuses to tap.

And to make it even more expensive to make gasoline, we have a patchwork of environmental regulations, requiring different formulas of gas from state to state.

So, the bottom line is that the price of gas is NOT unreasonable, when adjusted for inflation, and we need to build more refineries and drill more oil.

Or, reduce the number of cars on the street (and hence the number of drivers) by building more rapid transit (too expensive to build, and Americans don’t want to ride the bus), or by limiting the number of people driving, by enforcing mandatory family size limits, ala China (yeah, that’ll happen), or by cutting off immigration (yeah, that’ll happen, too!).

Folks, to borrow a phrase from the late, great, Robert Heinlein, TANSTAAFL!

There Ain’t No Such Thing As A Free Lunch.

Posted by Mike Lief at May 18, 2004 07:59 AM | TrackBack

Comments

I do not understand the complaining about the price of petrol. The right wing should be happy because market is factoring in diminished supply and increased demand; those who choose to drive petrol consuming vehicles will pay a premium for their increased use of petrol, or factor that cost into their next vehicle purchase. The left wing should be happy because, as Al Gore and Messr. Kerry desired, a higher cost of petrol will deter extraneous driving, thus driving down the accumulation of greenhouse gases.
And the politicians are happy because they are collecting their petrol taxes (or did I not hear their announcement that they were rolling back petrol taxes to give relief to consumers).

Posted by: abu tafal min at May 20, 2004 04:03 PM