I remember even in the late nineties when I started driving, it was a pretty surprising, notable thing when gas prices cracked $1.00 per gallon. Since then, they’ve crept up to the comically-inflated prices that they currently are.
I thought that $1.00 was the highest “realistic” non-gouging price - will we ever see that again? Or do the powers that be plan on keeping it high because they know we’ll pay it?
There are no powers that be, since the oil industry is widely spread with many producers and competitors. Sure, there’s OPEC, but that covers only a third of the oil production.
What it comes down to is plain economics - supply and demand. According to CNN, Americans are using a 3% increase in oil since last year, and China is having tremondous growth - which means more oil usage.
But no new refineries have been built since the 70’s (in the USA), and so it’s basically a bunch more demand, without any more supply with a bunch of politics tossed in for fun.
Actually, expressed as the amount of time you have to work to by a gallon, it’s still rather cheap. Much cheaper than about anytime before 1960 or so.
Last year sometime I found a site, sorry don’t know where it is - just stumbled across it and didn’t book mark it, with the cost of various goods from 1920 through 2001 along with some average income per family figures. Putting the two together I came up with the following:
year ------ price per gallon --------- cost in minutes worked
1920 ------- $.30 -------- 33
1930 ------- .25 -------- 19
1940 ------- .18 -------- 12
1950 ------- .27 -------- 9
1960 ------- .31 -------- 6
1970 ------- .36 -------- 4
1980 ------- 1.22 -------- 6
1990 ------- 1.22 -------- 4
2000 ------- 1.57 -------- 3
2004 ------- 2.4 -------- 5
Admitidly my analysis of the situation was less than rigidly scientific, but still…
I’m not bothered by the price of fuel so much as amazed that it’s stayed so low for so long.
I’m going to assume no, for the reasons mentioned in the above post. China’s economy is growing something like 8% a year, and ours is not doing that shabbily either. Add into that the increasing instability in the middle east, where a good chunk of the oil comes from, and the trend will likely be up from now until it runs out.
The pattern has been that the price will rise until the screaming gets loud enough, and then it will fall to a level that’s still above the price from which the rise started. The pattern has been that prices rise quickly and fall slowly.
Of course we go through periods of cheaper gas; but they always go up again. Gas was “expensive” in the 1970s and 1980s. People started buying fuel-efficient cars. There was a period of relative affluence and relatively lower fuel prices in the 1990s (see SandyHook’s minutes per gallon chart) so people started going for big, fuel-thirsty vehicles. SUVs seemed to become the dominant species on the roads. Now, mouse trap-like, the price of fuel rockets up.
IMO the way to lower the price of fuel is to lower demand. We can lower demand by using more efficient, higher-mileage vehicles.
Yes, I drive a “compact” SUV (a Jeep Cherokee, which is about as long as a Honda Accord, and lower than most vans). I needed it for purposes I’ve mentioned in other threads. But over the past couple of years I’ve been looking at small cars. The MGB (thoertically) will get 30 mpg, but it’s still in restoration. (IIRC, I was getting about 24 mpg in my non-overdive “B”.) With my new low-paying job, I can’t afford to get a new car. In the past, I’ve switched to motorcycles when fuel prices got high. A little problematic in the PNW though.
I’m guessing that relative fuel prices will not go down again for several years; not until people give up their gas-guzzlers and return to small, efficient cars. Only then will demand be substantially reduced, forcing prices down (relative to income).
A couple of notes on SandyHook’s chart. 1970 has gas at $0.36/gallon. I remember my sister buying gas c.1970-1972 in San Diego for $0.299/gallon. Also, it seems to miss the spikes caused by the 1973 and 1979 oil embargoes.
What do you mean by “not doing that shabbily?”
I’ve read (no cites) that the problem isn’t that there’s not enough oil being thrown around, but that there’s not enough refining capacity to turn it into gasoline. If that’s the case, then all that’s needed are more factories. Which will take quite some time to build.
Average family income is $28.80/hr now? Wow…
Which is quite a drop from the $31.40/hr a family made 4 years ago.
To compare prices across time periods you need to make some sort of adjustment for inflation, so that your prices are in constant, rather than real (or current), dollars.*
Are your dollars real or constant?
In constant dollars, gas prices peaked in March, 1981:
http://www.aiada.org/article.asp?id=12220
As long as gas costs less a gallon than water in a supermarket, we shouldn’t be complaining. :dubious:
Here’s a site that has contains a table of the average (real) price for a gallon of gasoline from 1949 to 2002:
http://www.eia.doe.gov/emeu/aer/txt/ptb0522.html
I plotted the data in Excel. It would appear the price for a gallon of gas steadily declined from 1949 to 1973. After 1973 it rapidly increased, and peaked in 1981. The price steadily decreased until 1986. From 1986 to 2002 the price was pretty flat.
Interestingly, the price for a gallon of gas in 1949 was more than the price for a gallon of gas between 1986 and 2002…
Well, according to Bob Woodward, the Saudis plan to increase oil output right before the election, in hopes that lower gas prices will motivate more Americans to re-elect George W. Bush.
Has anyone noticed that we once had Shell and Texaco then all the Texaco stations became Shell stations. We also had BP and Amoco then Amoco became BP. And I think there are others. Also, it seems harder to find independent stations. Are big conglomorates swallowing small companies and fixing prices? Uh oh, I better get my tinfoil cap!!!
And Exxon and Mobil merged to form ExxonMobil.
It’s not just that big conglomerates are swallowing smaller companies. It’s that even the biggest companies feel the need to merge with one another to become even bigger to compete in a global economy.
There’s nothing tinfoil about it. It’s happening in every segment of every industry.
Whether this results in greater competition between companies on a more even basis, or lesser competition because any industry segment with three or fewer companies controlling 50% or more of the market is effectively a cartel, depends on which economist you talk to. And which side of the bed they get out of on any morning.
But for gas specifically, OPEC probably has more control over pricing than any of the oil companies.
And the Saudi’s just suggested a 1.5 million barrel per day increase in oil production.
I wouldn’t call Amoco or Texaco small companies. Hell, Amoco was one of the “seven sisters.”
As for price fixing, there are two schools of thought 1) The prices are the same everywhere due to competition driving prices down to their bare minimum and 2) the prices are the same because price fixing occurs.
The answer you’ll get around here is #1, although I can’t imagine that it’s not #2. I think Cecil once had a column on price fixing/elascicity in tobbaco, which I think would apply in this situation too.
You will ignore the apostrophe in Saudi’s. You will ignore the apostrophe in Saudi’s. You will ignore the apostrophe in Saudi’s. Your eyes are growing heavy. You are getting very sleepy. You will go on to the next thread. You will remember nothing when you wake up.
[snap!]
The way I understand it is that the big companies are merging then closing refineries to streamline (or somethng) For example. Oil Co. ‘A’ buys Oil Co. ‘B’ in state ‘X’. Well Oil Co. ‘A’ has a refinery in state ‘X’, and so does Oil Co. ‘B’. So, Co. A closes Co. B’s refinery. Therefore reducing supply, but demand still goes up- more money for Co. A.
either that or I need a tin foil hat too
I’ve posted elsewhere about how outsourcing and “new job creation” has affected me personally. At today’s petrol prices, I still had to work more than five minutes to buy a gallon of gas at my previous salary. (A little more; but I haven’t calculated it.) Now, with my new job…
2004… 14 minutes
Although I have no cite to hand, I’ve heard and read that, while oil reserves are still relatively plentiful, they are getting harder, and therefore more costly, to access and retrieve, and this is likely to keep increasingly upward pressure on oil prices forever.
That’s it exactly.
Huh? Our economy isn’t doing “great”, but in terms of oil consumption we’ve doing quite well thanks. Besides, it used to be that oil and gas prices only worried the US and Western Europe. Now that India and China are growing so fast, we have so much more demand with little increased supply.