Friday, April 02, 2004

Don't listen to what people say, watch what they do. 

An article in today's NYTimes made some points than anyone who drives U.S. highways knows full well:

For Americans, Gas Guzzlers Are Kings of the Road

By Danny Hakim
April 2, 2004

Gasoline prices may be at an all-time high, but that is not deterring Amercans from buying gas guzzlers.

Maintaining a trend that dates back more than a decade, American buyers continued to shift from passenger cars to the largest and least fuel-efficient new vehicles that auto manufacturers offer, even as gasoline prices soar, according to the industry's March sales reports.

National average pump prices hit $1.76 a gallon on Monday, the highest on record, according to the Energy Information Administration. But when inflation is taken into account, gasoline remains cheaper than it was in 1981, when prices peaked at just under $3 a gallon in 2004 dollars.

Despite all the hangwringing over "high" oil and gasoline prices by politicians and the media it is evident that prices are not high at all. As this article points out gasoline prices are barely half of what they were a little over two decades ago. So the next time you hear a report of gasoline prices being at an "all time high" keep in mind that in real terms (ie adjusted for inflation) they are not even close. And the next time a gigantic SUV goes flying by you at 80 mph on the highway what that is person is really telling you is how inexpensive gasoline is.

The same is even more true for oil. A barrel of oil currently sells for around $35. But adjusted for inflation a barrel of oil in 1973 sold for $100. So the reality is the price of oil is moderate by historical standards.


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