Gas prices… fact or fiction?

Much has been made about the recent hike in gas prices and that the tourism industry is suffering because people aren’t getting in their cars or on planes because the price of gas has gone up and it’s now more expensive to get from point A to point B.

Are we really being that hard done by?

My contention is that gas prices really aren’t that bad. Sure no-one likes to pay more than they previously did for anything but gas really isn’t so expensive when you compare it to other products:

PRICES PER GALLON

Diet Snapple  $ 10.32 

Lipton Iced Tea $ 9.52

Gatorade $ 10.17

Brake Fluid $ 33.60

White Out $ 25.42

Vick’s Nyquill $178.13

Pepto Bismol $ 123.20

Evian Water $ 21.19

So America seems to be in a state of panic because of the rising price of gasoline and all the talk show and radio hosts think that we’re on the verge of mass riots and that long, dark economic days are upon us.

In 1955 gas was 29 cents per gallon…an era of big cars, big engines and so called cheap fuel. Fact is that in 1955 one dollar was worth a lot more than today’s dollar. Fact is that if we were to use today’s dollars then gasoline would have cost $1.76 per gallon in 1955.

So, are we worse off than in 1955. The answer is “No.” In 1955 people were poorer than they are today and $1.76 had a bigger impact on the pocket than it does today. If we then take into account inflation and changes in disposable income then a gallon should really cost $5.17 today.

 Now let’s look at the real costs to a household. In 1998 a gallon sold for $1.03 per gallon which is the equivalent of $1.35 today. Now 1998 was a unique time and gas was at being sold at a low price… in 1981 it was $1.38 or $4.38 after adjustments but people are still looking at the price 10 years ago and saying it’s far too much.

Reality is though that the average household is now spending $136 more on gasoline per month than it was in 1998 but the amount of disposable income per household has increased much faster than pump prices at $800 per month.

So, all in all, while no-one enjoys the higher gas prices, they really aren’t as bad as most people think. And, gas is still cheaper than a gallon of Evian water… and did you know, Evian spelt backwards = naive.

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