April 20, 2005

News > Gas Prices at 20-year High (Adjusted for Inflation)


Every year as summer vacations approach gas prices go up and doom is predicted. Then prices go down. As prices go up with inflation, doom is predicted, then people note that gas isn't all that high when past prices are adjusted for inflation.

Now gas prices really have gotten high, even when adjusted for inflation.

Short-term, Bush needs to encourage oil production among exporting nations. Long-term, we need to become more energy-efficient. We also need to bring ANWR production online, not as a replacement for efficiency, but as a hedge against periodic global shortages and cartel behavior.

Posted by lesjones


Next time you hear somebody griping about "gouging at the pump," ask him if he's ever bought bottled water, which usually runs about $6/gallon.

Talk about gouging.

Posted by: Thibodeaux at April 20, 2005

ANWR is not a short-term solution, nor much of a hedge. The amount of oil there is so small, modest conservation efforts would have more impact.

ANWR will provide a nice bump in the stock price of oil field services firms long before it has any impact on pump prices. What are we looking at? Two cents at the pump two years from now? ANWR is such small potatoes, a few oil companies have already declared they are uninterested in drilling there because the marginal value of the yield is not worth the PR risks.

Dick and his talking head are phasing out the hybrid vehicle tax credit while the SUV tax credit remains in force. That is blatant stupidity from a consumer viewpoint, but the consumer viewpoint is not a big factor in the policy equation for this administration.

Shouldn't an economically competent guy like you be having a bit more trouble swallowing the party line on this issue?

Posted by: hellbent at April 20, 2005

Hybrid cars don't actually make environmental, let alone economic sense. The increases in fuel efficiency are pretty minimal and the increases in manufacturing difficulty and the environmental damage from the batteries cancels that our pretty much.

I have great hopes for fuel cells, or perhaps bio-deisel, but we are aways away from that.

ANWR will provide a bigger price difference than many expect in my opinion. Not because there is not a signifigant amount of oil there, it is pretty signifigant, but because prices are set at the margins. You don't have to double the amount of oil being pumped to halve the price, you just have to make supply more than the demand.

Posted by: Dave Justus at April 20, 2005

hellbent: I see ANWR as a defense not against small price bumps but against OPEC getting together and severely limiting their output, or a major disruption in the Middle East cutting off the oil supply.

I actually wouldn't mind seeing re-instatement of the hybrid credit. I wouldn't mind seeing some of the silliness concerning the SUV/light truck CAFE exemption and depreciation rules going away, either.

Posted by: Les Jones at April 20, 2005

How stupid of me to think encouraging people to drive cars that get 45mpg is different than encouraging people to drive cars that get 15mpg. 45 is "pretty much" the same as 15, especially when you multiply it by all those gallons everyone buys. It just turns into big numbers, and big numbers are just big numbers. They are all "pretty much" the same with all those silly zeroes tagged on just filling up space.

Posted by: hellbent at April 20, 2005

Les, I'm glad you have more sense than Mr. Justus regarding tax incentives.

OPEC produces about 27 million barrels per day. The US consumes about 20 million bpd. ANWR is projected to generate 1 million bpd, and it will take close to a decade to start production there. Increasing CAFE standards would have a more immediate impact and could easily reduce demand by 1 million bpd or more.

The threat of OPEC turning the screws on us or switching their pricing to a currency other than dollars is more immediate than ANWR's ability to bolster supply. ANWR is a hedge against OPEC/Middle Eastern supply disruptions only if those disruptions take years to materialize. Conservation is a more effective and timely solution.

Posted by: hellbent at April 20, 2005

I didn't comment on the SUV tax breaks, I do think that they suck.

I could live with a tax break based upon getting a certain mpg rating regardless of how you got there, better in my mind would be ratings based on emissions. A tax break just because it is a hybrid is stupid.

Posted by: Dave Justus at April 20, 2005

Yep, it'll take a decade to get ANWR onl!ne, so the sooner we get started the quicker that decade'll be up.

I'm in favor of efficiency, but we need production, too.

Posted by: Les Jones at April 20, 2005

here's a big kiss for you >

and when you figure that gas prices now are actually lower than in 50's... adusted for inflation and taking into consideration the much lower mean salaries...

our grandparents paid more for gas than we are now... just see this...


Posted by: jonny at May 02, 2006
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