I am going back to talking economics for a minute. Volokh links to this Gregg Easterbrook post which, in turn, points us to this chart of US gasoline prices in 2002 dollars from 1950-2002. On the same topic, we also have Steve Verdon [DRINK!]

First of all, it’s nice to see our friends up in Corvallis doing some good work. Secondly, it’s good that somebody is pointing out this sort of thing. While it is easy to complain about gas prices at the pump, especially here in Oregon where we pay about 16 cents more than the national average, it’s important to adjust that for the scale of the economy as a whole. A quick calculation gives me that in 1998 dollars; I’m paying about $1.65 per gallon today. That’s 35 or so cents per gallon higher than I was paying in 1998. Now, that might seem like a bundle, but consider the minimum wage and tax increases in Oregon since then (not to mention that Eugene has a city-wide gas tax of three cents per gallon, which Portland did not) and things are probably a lot closer to similar. I don’t mean to completely discount market effects, but gas prices really aren’t that out of line with historical trends.

Also, consider OPEC’s declining market share. During the oil crisis OPEC had roughly 55% world market share, but it’s been in decline ever since. Late 90s measurements had OPEC’s share at about 42%, and it’s still falling. They are a cartel, and their heads do need some bustin’, but with discoveries of deposits in parts of the former USSR, the recent feasibility of deep-sea exploration, and deposits in Alaska, the threat of an OPEC based oil-shock is much lower than it has been historically.

So, kids, when you hear Dan Rather and Katie Couric blather on about how the high price of gas is killing American families, or beating up puppies or some other such nonsense, ignore them and smile with your knowledge of real-dollar valuation.

This entry was posted on Sunday, March 14th, 2004 at 13:48 by Timothy and is filed under Miscellaneous. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.