My wife and I recently struck up a conversation with a very nice elderly couple while shopping and waiting in line to have some fabric cut at the Jo-Ann store in Bellevue, Washington. The wait was almost 45 minutes so we had plenty of time to discuss various subjects. Our conversation quickly turned to the state or our economy after comparing how many years each of us have been married to our spouses.
The wife lamented about prices of everything including food and rent skyrocketing recently. She also brought up the price of gas – my favorite subject – and how it could have reached $4.50 per gallon in the middle of last year and then come down so fast by the end of the year. I responded to her that we are currently paying less for gasoline then we have in the past ten years.
The woman then said that she remembers paying 36 cents per gallon 40 years ago. I recollected paying just 20 cents per gallon to get our 1952 Dodge Coronet filled up at the Sinclair gas station across the street from my home in North Miami, Florida in 1957 after my family emigrated there from Holland.
To prove my point I went to the Energy Information Agency (NYSEMKT:EIA) web site and found out that the average price of gasoline in the first quarter of 2009, compared to what we paid in previous years, has become a relative bargain once again.
The Energy Information Agency research chart also shows the average price for a gallon of regular unleaded gasoline, which in 2009 is the lowest price since we hit $1.40 per gallon in 1998.
The average price in 2008 was the highest since 1981 when the Reagan years started our economy booming once again after enduring the two oil embargoes in the 1970’s, which spiked the price of gasoline to an all time high.
Using 1900 as a baseline, each US dollar provided $1 worth of purchasing power in 1900. By 1950, the relative value or purchasing power associated with each US dollar had declined to 33.3 cents—one third of its value in 1900. By 2007, the relative value of a US dollar had further declined to 4.6 cents, less than 5% of its value in 1900.
The boom of the last ten years with Wall Street excesses leading the way is over if President Obama according to the interview published in this week’s New York Times Magazine. He said that Wall Street is not going to play as dominant a role in the economy as regulations reduce "some of the massive leveraging and the massive risk-taking that had become so common".
On the other hand Steve Forbes was asked about this article on the Sunday morning Fox and Friends of the Fox News Network. He said to be careful for what we wish as this from the top down regulation on a free enterprise will result in more from the top down government control.
Mr. Forbes also said that the exotic derivatives programs cooked up by Wall Street investment firms did themselves in and now is the time to let the free market decide where to better invest our time and money.
Please stop me anytime while I am waiting in line and bring up the subject of the price of gasoline. As of next week you can catch me at Netzer’s Hardware store in Terry, Montana as we are moving into our newly remodeled home in the middle of town.