Put Into Perspective
Generally, it seems that perspective is often lost on people. For example, sure enough, gasoline prices have gone up. Paying $4 at the pump for a gallon of joyride fuel hurts especially when one considers that it was so much cheaper only so very recently.
But it helps to see the bigger picture.
Robert Bryce puts gasoline prices into a broader perspective. Gasoline is only slightly more expensive than in 1922, despite obvious increases in demand and cost of production. And, considering the overall cost of car ownership, the percentage that fuel costs make up has actually decreased since the 1970s. Further, compared to what other countries’ citizens pay at the pump, Americans get off easy. In European countries, prices per gallon are often as much as double. Consider also that
Gasoline is…cheap compared with other essential fuels. A Starbucks venti latte costs the equivalent of $23 per gallon while Budweiser beer runs $11 per gallon.
Nevertheless, it must also be said that many such price hikes are often attributable to government intervention, in this case, refusal to tap into U.S. oil and gas reserves due to environmentalist concerns and the nature of OPEC, an organization dominated by non-free market countries. Other examples to think of are sugar and corn. Laws protecting sugar producers in the United States against foreign competition drove up the price of sugar, and laws passed to increase the amount ethanol added to gasoline are now driving up corn prices.
Also ignoring the larger perspective, a Wall Street Journal columnist complains about the apparent downturn in the economy and drastically proclaims that:
[w]hat has overtaken America’s working people is not a natural disaster like “globalization,” and not even some kind of societal atavism in which countries regress mysteriously to their 19th-century selves. This is a man-made catastrophe, a result that proceeded directly from the deliberate beatdown of organized labor and the wrecking of the liberal state.
It is, in other words, a political disaster, with tax cuts, trade agreements, deregulatory measures, and enforcement decisions all finely crafted to benefit one part of society and leave the rest behind.
Please! A classic example of leftist hyperbole concealing the real facts in order to push for redistribution of wealth. Luckily, there are some sane voices, such as this one in U.S. News:
Since 1982, according to the National Bureau of Economic Research, the economy has suffered two recessions—in 1990-91 and in 2001—for a total of 16 months. By contrast, in the previous 25 years, the economy suffered six economic downturns for a painful total of 67 months. And since August 1982, when it bottomed at 776, the Dow has risen almost 1,700 percent. That ascent reflects an economy that has more than doubled from $5.2 trillion in 1982, adjusted for inflation, to $12 trillion today. Not bad at all.
Indeed. Longevity, health, innovation, prosperity and wealth in the 21st century compared to a hundred, fifty, even twenty years ago. Not bad at all.
May 21st, 2008Topic: News Tags: corn prices, gasoline prices, government intervention
May 22nd, 2008 at 7:03 am
“Gasoline is only slightly more expensive than in 1922, despite obvious increases in demand and cost of production. And, considering the overall cost of car ownership, the percentage that fuel costs make up has actually decreased since the 1970s. Further, compared to what other countries’ citizens pay at the pump, Americans get of easy. In European countries, prices per gallon are often as much as double.”
Hey, I love the way your blog has changed in looks!
OK, I have to respectfully disagree with this reasoning. First, gas should not have slightly increased or decreased since the 20s or the 70s — it should have gone WAY DOWN if market forces were at work. Further, most people don’t care to compare to 90 years ago. They are comparing to five to ten years ago when gas was HALF to ONE FIFTH!!! the price it is now. In 1999 I was paying $.82 per gallon. Today I am paying $3.75 per gallon for the same octane. Also, I don’t care about how much Europe pays. They pay more because there is more government intervention to artifically make gas more expensive there. I know that you don’t mean it that way, but I hear that argument constantly from leftists: that Americans can just deal with gas prices. Yes, we probably can. The real argument is, “Just how much life is it OK to take?” This is making a huge dent in peoples’ pocketbooks over here. For the first time ever, they are buying smaller cars.
Look, I don’t care whether gas goes up or down, really, so long as the market determines the price. That is not the case here and the results matter enormously to me. Gas has not gone up recently due to market forces. It has gone up because we have a weak president who is unwilling to act in the American interest and stand up against barbarians who act like mobsters running an extortion racket. Number one, repeal the gas tax. Number two, these oilfields should go back to their original owners. There is no excuse.
June 3rd, 2008 at 10:20 am
A couple comments.
I don’t see how the increase in cost of production per gallon of gasoline is obvious. Clearly we’re spending more on the production, but the marginal cost has dropped enormously.
I think the US’s refusal to tap into their reserves is more complex than environmental pressure and the implied sinister nature of OPEC.
We can’t rely upon oil to fuel our energy needs indefinitely for two reasons. First, it’s a finite resource and demand from developing countries (China and India specifically) will continues to rise. And second, being dependent on oil in turn makes us dependent upon the middle east. Weaning ourself off is an excellent national security policy.
The only way to wean the american public off oil is through high prices, and for that reason I think the current trend is good. Europe has higher gas prices because of higher taxes, but is also much less dependent on tumultuous parts of the world for it’s energy.
Monica is grossly mistaken in thinking that the recent rise in gas prices is not due to market forces, and that presidential influence is somehow a mechanism of free trade. Gas prices have increased for very clear reasons: China and India are new huge economies with an equally large demand for energy, our wars in the middle east have destabilized a large portion of the supply, and most importantly, we’re willing to pay these prices. Ultimately the price elasticity of demand is too inelastic and now the producers know it.