Monday, May 22, 2006

Pump It Up!

The average price of gasoline in the United States is currently $2.85 a gallon.

Is that (A) an all-time high, or (B) more or less where the price of gasoline has stood for the last fifty years?

The correct answer is (B) Gasoline is no more expensive today than it has been for most of the postwar period, and it is considerably cheaper than it was in the late 1970s and early 1980s.

What's that, you say? You've been driving for years and you know for a fact that you never before had to pay upwards of $2.00 for a gallon of gasoline? You know gas stations were charging less than 50 cents a gallon back in 1970? Right? Well, don't worry, there's nothing wrong with your memory. But the fact remains: The cost of gasoline today isn't toppling any records.

Here's the trick... you have to factor in inflation. Comparing today's prices with those of the past is a meaningless exercise unless the prices are given in constant, or "real," dollars. And in real dollars, gas prices today are normal. It is the inflation-adjusted price that tells you whether the true cost of a product has increased, decreased, or stayed the same.

Who wants to hear all that though? The cost may just seem to be expensive to me, but perception is reality. If it’s perceived to be so, that makes it so…I mean my favorite Pizza Delivery Place perceives it to be so expensive that they only deliver within walking distance.

In a gallon of unleaded, crude oil accounts for $1.45...

Transporting the gas to the pump is just 5 cents a gallon...

Every gallon of gasoline is 45 cents in tax: 18 cents for the federal government and 27 cents for state governments...

But don’t worry, Big oil companies like Exxon-Mobil make money at every step of the process because they take the oil out of the ground, refine it and sell it. Exxon-Mobil's profit is estimated at a hefty 30 percent.

Are we are being gouged at the pump a little bit?

In the meantime, how do we alleviate the problem?

Maybe invest in a few more refineries, increased/better public transportation, as consumers we can purchase our gasoline from the cheapest distributor, build more Hybrid cars that use alternative fuels, and other non-conventional methods.

So, if higher gas prices don't motivate American consumers to use more public transportation or to purchase more efficient cars and trucks in the years ahead, we'll have no one to ride but ourselves about the cost of driving.

10 Comments:

Blogger KMAN said...

I don't care how you slice and dice it, I hate paying almost $3.00 a gallon!

22/5/06 22:44  
Blogger Digital Fortress said...

LOL! We've been spoiled paying so little for it all this time, but there's no use crying over spilled milk now...time to stop being a Sports Utility Victim and get one of those cars that run on potatoes.

23/5/06 08:11  
Blogger Tracy said...

I'm not happy about it because I remember paying less than a $1.00 4 years ago in Georgia. But, you, of course, are right. Logically, I know you are. I must admit, I'm glad I no longer have my Jeep Grand Cherokee and instead get 36 MPG in my little Honda Civic.

23/5/06 08:14  
Anonymous Jen said...

How do you explain why it costs $1.58 in Burleson, and $1.85 in Mansfield?

23/5/06 08:50  
Anonymous Alberto said...

Supply vs. Demand

Most gas stations set the price based on what they expect to pay for the next delivery. Then they also factor in the tax that they are paying due to the zone the station is in, and if they can get away with increasing their profits they will. If the customer is paying for it then why change it?

23/5/06 09:25  
Blogger Season said...

We can explain that, Jenny, because Burleson rocks!

23/5/06 20:13  
Anonymous Jen said...

Well, I'm not paying it.

23/5/06 21:31  
Blogger grim said...

I agree! Bring on a gas holiday!

24/5/06 09:01  
Anonymous Alligator said...

I'm in for that car that runs on potatoes! Where do I sign up? :)

25/5/06 13:16  
Anonymous Sarah said...

stumbled onto your blog and found this post to be very informative. I'm trading in my SUV for a new Toyota Pruis.

26/5/06 16:21  

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