I stumbled across this article, and...sad to say...when it comes to this sort of thing I get a bit lost. lol Hence the reason I stay out of politics and anything related to it...I just don't know enough to be intelligent about it. So what I'm wondering is: How true is this article, and what are people's viewpoints on it?


The Article:

America appears to be in a state of wild-eyed panic about the rising price of gasoline. Talk radio hosts and T.V. populists apparently think that mass riots are imminent and that whole cities will burn unless politicians do something to save America from the long, dark economic night that is descending upon us.

In truth, gasoline prices today are taking less of a bite from our pocketbooks than has been the norm since World War II.

For instance, let's look at 1955, a year most of us associate with big cars, big engines, and cheap fuel – automotive glory days, as it were. Gasoline sold for 29 cents per gallon. But one dollar in 1955 was worth more than one dollar today. If we were using today's dollars, gasoline would have cost $1.76 per gallon in 1955.

Gasoline now costs around $3.00, so we are worse off than in 1955, right? No. Because we were poorer in 1955 than we are today, $1.76 then had a bigger impact on the pocketbook (that is, it represented a larger fraction of income) than $1.76 today. If we adjust gasoline prices not only for inflation but also changes in disposable per capita income (defined as income minus taxes), gasoline today would have to cost $5.17 per gallon to have the same impact as 29 cents in 1955.

Let's pick another year we associate with low gasoline prices – 1972, the year before the Arab oil embargo. Gasoline was selling at 36 cents per gallon. Adjusted for inflation, however, the price was actually $1.36 in today's currency. Adjust again for changes in disposable per capita income and the price would have to be $2.66 per gallon to have equivalent impact today.

Were we better off then when we rolled into the filling station in 1972 than we are today? No, because our cars get 60 to 70 percent better mileage today than in 1972 (22.4 miles per gallon versus 13.5 miles per gallon). That more than offsets the 10.5 percent increase in gas prices adjusted for change in inflation and income from then to now.

Now let's look at 1981, the year Ronald Reagan took office. Gasoline sold for $1.38 that year, the equivalent of $2.74 in today's currency. Adjusting for the change in disposable per capita income, prices would have to be $4.30 today to have an equivalent impact.

There are probably three reasons that gasoline prices appear so high to us today. First, many don't fully appreciate the long run effect that inflation has on prices. Second, many don't appreciate how much our incomes have increased relative to prices. Finally, we still remember 1998 very well, the year in which we encountered the lowest gasoline prices since 1949. Gasoline in 1998 sold for $1.03 per gallon, the equivalent of $1.21 in today's currency. Adjusting for growth in per capita income yields a price of $1.35 per gallon in today's terms. Today's price is more than double that and people resent the increase over the last several years, in part, because they think that 1998 prices were normal. But they were not.

Now let's put the recent price increase in terms of real outlays. The average household is spending $136 more on gasoline every month than it was in 1998 and $114 per month more than it were spending in 2002. But, believe it or not, real (inflation-adjusted) disposable income per household has increased even faster than have pump prices; by $800 a month since 1998 and $279 a month since 2002.

Accordingly, Americans are still, on average, economically ahead of the game.

No one likes high gasoline prices. But they are not as bad as most people think. Keep that in mind the next time some politician or media populist starts handing out the pitchforks.

Source: http://www.cato.org/pub_display.php?pub_id=6440

who ever wrote it is talkin out thier azz, i paid 4.09 a gallon yesterday. and in todays dollar, that 4.09 a gallon

I don't know who this guy is, but gas prices ARE as bad as we think. Plus he's basing it on $3.00 a gallon, which we all know is alot more then that now.

To add to this, salaries haven't gone up enough to balance out the costs of high gas prices or everything else that has risen.

Have him come and live in Southwest VA or other places that are suffering economically and live on our wages, then he'll get the big picture.

To Fiddle Or Not to Fiddle...

Well, I'm all for big protests all over the country...not just because of the gas prices, but the war and impending wars...

someones gotta step up

a true member of the souverign that everyone stands behind

no matter what who why or when..... they stand behind him

deal? or no deal?............lol

lol alrighty, thanks guys :P It's kinda what I figured...I was reading over it going, "uuhm...ok...yeah. No. Not so much." lol The way I kind of see it, the government and auto companies are/have been in league with each other for ages now, to make American's dependant upon vehicles...and then skyrocket the fuel prices when we no longer have a choice.

But that's just me...I love a good conspiracy theory lmao

so who would this person be "a true member of the sovereign" ??

its been coming since the dawn of time sew i hear...to reap my echo.......lol

a great war..... one of good vs evil and who's to say whats what

this is no cause for alarm.... just lettin ya know i'm present and accounted for

Im selling my last piece of bread for gas......

It's fine to say gas isn't so expensive when you have money to burn.

But if you're like most of us, wages not keeping pace with inflation, unemployed or underemployed, with food and other prices going up, as well as gas, you're often robbing Peter to pay Paul just to afford a tank of gas.

<-----selling all of my shiney sparkley baubles for GAS!!!