Adjusted for Income & Fuel Efficiency Increases, Gas Today is Almost 50% Below Record High 28 comments
an article to
-
Font Size:
-
Print
- TweetThis
Yesterday's CD post of a graph of 1,000 gallons of gas as a percent of per-capita disposable income (top graph above) shows that we're still nowhere near record highs for gasoline, when measured as a share of income.
Warren Meyer at Coyote Blog thoughtfully suggested adjusting the analysis to account for the significant increases in fuel efficiency over time, see middle chart above, which shows the 64% increase in fuel efficiency from the early 1980s to 2005.
The bottom graph above shows the results of Warren's analysis (see his chart here), which calculates the percent of per-capita disposable income required to buy enough gasoline to drive 15,000 miles, at the average fuel efficiency in each month from 1980 to 2008. This adjustment for increased fuel efficiency makes the initial results even more dramatic.
After adjusting for: a) higher incomes and b) greater fuel efficiency since 1980, we are nowhere near record highs for gas. In fact, to match the 13.75% level in 1980 when average fuel efficiency was only 16 mpg (and gas was $1.26 per gallong and per-capita disposable income was $8,575), gasoline today would have to reach $7.53 per gallon, almost twice today's prices!
Bottom Line: Gas prices today are almost 50% below the record highs of 1980, after adjusting for higher incomes today and much greater fuel efficiency.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
> jack
> jack
You instead could blame some of the oil companies for not exploring more during 90's because prices were so low. That's market signals for you; they can't respond to the signals fast enough to find and bring new product to market.
BTW, if you look at what we did in West TX in the 70's as the oil fields depleted, we drilled more and more holes for less and less oil. That's the same take in Bakken; you have to drill lots of expensive holes for returns that are much less than say what you get in KSA.
Yes, we'll have to drill at some point, but it won't reduce prices at all because we've simply used up almost all the easy-to-get-to oil. That's human nature. Now we have to go after oil that's in 9,000 feet of water and 20,000 feet under the sea bed and is 275mi off-shore. Sure, we've got ANWR to tap at some point, and the OCS (which really only has oil in a tiny part of the west, and a good chunk in the gulf, plus Alaska, virtually none on the Atlantic side).
As for how environmentalism is Marxist?... well you've baffled me.
> jack
> jack
> jack
Then think about how new cars and "light trucks" get recycled into used ones - - the re-sale price of light trucks has collapsed in the past year. So a working family looking for an affordable vehicle will more often than in the past (basically a one-time shift in the mix) opt for the "truck" over the car, drive less, and bear the higher fuel cost. At least until the excess of trucks not used for work makes it into scrappage - - several years from now. (In the long run the workers are dead...)
Before you start screaming "drill' , shouldn't you have the equipment to do the job? Sounds like another WMD scam to me.
1) Why does the "Average MPG" chart cut off at 2005? Hint: SUV sales peaked in 2006.
2) Why consider improvements in Average MPG, unless you also consider increases in average miles driven per year?
<Pain_man: your drilling solutions are also decades away from bringing refined product to market.>
No, in fact, this is not true.
Tho' I did not mention it (my bad), concurrent with drilling our own oil, would have to be building more refineries.
No refinery has been built in the US (thanks to environmentalist whackism) in over thirty years.
So concomitant with drilling in Anwar--and increasing coastal drilling off of Florida and California--would be the construction of new refineries. (Which would doubtless be both much more efficient and much less polluting.)
Oil is primarily used for gasoline. Most of our electricity comes from coal, natural gas and nuclear. A person like you, tuj, probably knows this, but you'd be surprised at how many people don't (or maybe you wouldn't, ;o). Nay-the-less, it needs to be mentioned.
And I never said, as you imply I did, that increasing domestic drilling was either a panacea or an instant cure for four buck a gallon gas. (putting 13 gallons of 87 octane into my Explorer cost $55; I'm totally disabled so I only drive it 2-3 times a month; just needed to preempt the "Hah! You're an evil SUV driver!!!!").
But we have to start somewhere to move toward energy independence. And "alternative" fuels are, to reiterate, decades, at best, away from viability. The simple, irrefutable fact is that oil is the life blood of the US and the world economy and will remain so until my 8 year old daughter is a grandmother. (E.g. barring ever unpredictable technological breakthrus such as practical fusion reactors.) It's just that simple.
That doesn't mean that there shouldn't be any research on power sources other than oil. No one's advocating this. The best way to do that is to giving tax credits to the energy companies. If the people want a diversified energy arsenal, then we're going to have to subsidize it with tax dollars. We can't expect energy company shareholders to do it for free. Especially when the Federal government makes almost 300% more per gallon of gas sold than do the energy firms (and this doesn't even count rapacious, confiscatory states like California).
But the problem isn't a lack of oil. There's huge amounts; the Russians have so much it's amazing (which is why one of China's primary strategic goals is the conquest of Siberia; for an excellent fictional idea of what such a confrontation would be like, read Tom Clancy's "The Bear & the Dragon"). The problem is a,) getting to it; b.) the Russians constructing port infrastructure that can handle the supertankers which they currently cannot; c.) there's a problem with the Siberian oil itself, something oil companies, particularly Chevron, are working on to resolve. Furthermore, a massive strike has been found off the cost of Newfoundland. And it looks like another one has been found off the coast of Brazil. Good. But it's still foreign oil. It still means massive transfers of wealth from the US to other countries.
I do not recall the name, but a current active drilling area in Alaska has proven to have vastly more oil than was anticipated. And there's every reason to think that the situation is the same with Anwar.
One of the greatest drivers of the price of oil are the expanding economies of, above all, China, but also India and others. The Chinese alone now use more oil, and emit more air pollution, than the US. It's no longer a matter of the US/Europe/Japan being the dominant users.
Thus, while drilling is not an instant fix, it is the only practical one at this point in time. It's utterly absurd to pay $145/barrel for oil to Mexico, Nigeria and Venezuela (our primary suppliers, the US gets only a tiny fraction of our oil from the Middle East).
If the Democratic Party, and the extremist Left-wingers who've dominated it since McGovern, hadn't obstructed both drilling and refinery construction for 30 years, then the pain, if the situation existed at all, we current feel would be mild, at worst.
You are, of course, absolutely right about the massive environmental damage perpetrated by thugs in the Kremlin. Huge areas of Russia, the former Soviet Republics and Eastern Europe are utterly devastated. Chernobyl is only the most dramatic example of the disregard for the health of their human subjects as well as the environment. The late Gen. Dmitri Volkogonov recalls, in "Autopsy for an Empire", that the first news he got of the disaster in the Ukraine aroused little attention because catastrophic industrial accidents were so common in the USSR. And as a Lt. Gen and a favorite of the Politburo (until his bio of Stalin!) he had access to information that few did.
But the present home of communism is, inarguably, environmentalism. Changing the name of the leopard does not remove its spots or de-claw it.
The driving principle is that we "Joe Six-Packs"*, we average Americans, aren't smart enough to run our own lives. That bureaucrats in window-less offices in DC know more about how to run our lives than we do. That we are so "unenlightened" that we need their guidance. That is NOT American. That is not consonant with liberty. That dismisses American exceptionalism which has made this the greatest country in history; an exceptionalism that has spread prosperity to the largest number of people ever.
One of the most telling examples of this truth was said by the concocter of the "global warming" hoax, Dr. Steven Schneider, who has said his ultimate goal is world communist government run by the UN (as reported by story in Insight Magazine in 1990).
In the same interview, Schneider also stated that it is perfectly permissible for scientists to falsify data and lie in order to achieve political goals. In other words, "Joe Six-Pack" is so stupid that mendacity and fraud has to be used to "save" the people from themselves.
Schneider was also one of the people, in the 70s and early 80s, proclaiming that the next Ice Age is just around the corner (which it is; the current interglacial period we live in is coming to end as we are still in the Ice Age that began 2,000,000 years). Time Magazine did a cover story on it 1976 (an image of which Rush posted on his website). I also saw Schneider on a 1982 episode of Leonard Nimoy's "In Search Of" proclaiming the Coming of the Ice in no uncertain terms.
*(see how the derision drips from the very terms used by the Liberal/Socialist leadership to describe the people who make this country work, the very people who live in what is obnoxiously labeled as "fly-over" country. You know: the ones so busy clinging to their Bibles and guns whilst quaking in fear of people "different" from them.)
So what...the economy is a mess and we need some good ideas TO FIX THE PROBLEMS SO WE DO NOT HAVE THESE PROBLEMS AGAIN!