Saturday, January 22, 2011

Cost of gasoline adjusted for inflation.

I noticed gasoline over $3.00 per gallon today. And I hear talk of 50 or 75 cents more per gallon by the summer.

Painful? Yes, especially for long-commuters.

But when adjusted for inflation the price is not not much different than other "above average" times in the last 90 years. Gasoline was 25 cents per gallon back in the '60's, but when adjusted for inflation, that is, when adjusted to the buying power or value of the today's dollar, the price today is not wildly different from the price back then.

That being said, 2011 prices at $3.00+ a gallon are on the high side of the mean.

Want to feel better? In London, gasoline works out to be over $8.00 a gallon, US.

Inflation Adjusted Average Gasoline Prices, from

Chart: © Copyright 2010.  Timothy McMahon and
For more information on this chart please go to:



John said...

OK, I'll take the bait. A couple of things come to mind.

First, what are the driving factors behind the fluctuations in the price of gas at the pump? I don't see any direct correlation with market forces.

Second, what government policies are reflected through gas tax and the resultant prices? Does Uncle Sam only want to collect tax commensurate with the cost of maintaining the roadways those cars drive on? Or might gas taxes be used to express other policies? For example, high taxes to motivate less driving (pollution), to motivate higher mileage cars, or to fund alternate energy research.

Yes, relative to the Brits we have cheap gas. But they also have cucumber sandwiches. 'nuff said.

Francis Shivone said...

John -- oil as a commodity works on its on set of forces, OPEC, government policies, etc. And I sure can't figure them out.

The UK and Europe definitely control usage through tax, we are more reluctant to do that. Our gasoline tax is mostly a usage tax, as I understand it.

When my daughter went to visit her aunt in England she was sent off for the day with a pickled beet sandwich and cucumber sandwich. Something wrong with that.