Mike Giberson On Gas Prices

A guest post from my colleague Mike Giberson:

In response to your ENOUGH ALREADY ON “RECORD HIGH” GAS PRICES, note that the Washington Post does, on occasion, adjust for inflation in its commentary on gasoline prices:

For one, it is worth pointing out that gasoline prices, while higher than a few years ago, are still well short of their historic highs. Adjusted for inflation, gas prices are still significantly lower than they were at the beginning of the 1980s, and they have been at historical lows for the past decade: No wonder demand is high.

In fact, the Post almost always gets a few things right as it bounces along to an erroneous conclusion.

Given the hidden costs of high fuel consumption – pollution, urban sprawl, time wasted in traffic – it can be argued that this country has paid a high price for not having higher fuel prices. A price rise now hurts people all the more because they have made choices – living in distant suburbs, driving large cars – predicated on low fuel prices. That fact, to no small degree, is the fault of this administration, as well as those that preceded it, for not having had the courage to wean the country off low-priced fuel when it would have been easier to do so.

The conclusion seems to raise more questions than it answers. Let’s do a little Q and A:

Q: When were those “good old days” when it would have been easier to wean the country off low-priced fuel?

A: From the logic of the sentence they were during “this administration, as well as those that preceded it,” so I’m guessing that they start in the last year or two and then in prior years.

Q: So, when were those choices made – to live in a distant suburb, to drive a large car – predicated on low fuel prices?

A: Well, they must mark the end of the “good old days” period, because once the decisions were made a “price rise . hurts people” and it is no longer easy to “wean the country..” We know this was just in the last year or two, otherwise “this administration” wouldn’t have to share the blame for a lack of courage with “those that preceded it.”

Q: What can we conclude from all of this?

A: My guess is that the Post editorialist bought a Lincoln Navigator and moved out to Potomac in the last year or two.


13 thoughts on “Mike Giberson On Gas Prices

  1. Oh, had we only had enlightened administrations like those in Europe all these years. We could have been paying $4.00 per gallon years ago; and, we would all be living in flats in cities and driving upholstered roller skates. We’d all be taking buses or subways to work, or walking if the weather was nice. And all that lovely farm land which is now the distant suburbs would still be producing more farm products we don’t need and can’t sell. The government, on the other hand, would have had an additional $2.50 per gallon to waste on “pork”, or agricultural price supports. The opportunity costs are staggering!

  2. How do gas taxes factor into
    all of this? Do the constant-dollar
    costs include just raw gas price
    or do they include the gas taxes too?

  3. On average, I believe federal+state taxes make up approximately 44 percent of the price of a gallon of gasoline. That’s from memory, though.

  4. The American Petroleum Institute reports an average gasoline tax of 42.7 cents per gallon. Of that 42.7 cents, 18.4 cents per gallon is federal exise tax and the rest is state.

    Adjusted for inflation, gasoline taxes are lower now than they were in the 1950s-1970s, but higher than the average gasoline taxes of the 1980s.

    Check out API, “Historical Trends in Motor Gasoline Taxes 1918-2002” (Available from http://www.api.org).

  5. The tax component of a gallon of gasoline is hardly limited to the excise tax at the pump. There are taxes imposed throughout the system on property, income, etc. which add substantially to the tax component. The actual numbers would be very interesting.

  6. It should also be noted that, in California (which consistently has the highest gasoline prices), I understand the state sales tax is applied to gasoline (unlike most states). So when they are paying $2.12 for a gallon, close to 20 cents of that is state sales tax.

  7. Also, California clean-air legislation is so stringent that only a few refineries are capable of selling their gas in California, meaning that the state government has legislated a fuel monopoly into place.

    Also, nobody drives in Europe because ten minutes’ drive means you’re out of the city, and a few hours’ drive will take you from one side of the country to the other. Mass transit is much more common because everything’s so compressed; you live within walking distance of a bus stop, and a bus will be there shortly to take you to within walking distance of the place you want to go. In my case, even if I _wanted_ to take the bus, I’d have to drive to the bus stop and then walk a half-hour to get to work.

  8. The API numbers underestimate the ultimate taxation of fuel at the pump. Local taxes also play a part, and easily raise the tax level to 44% of the cost of a gallon of gas.

    The real culprit here is a lack of a national air quality/energy policy. EPA essentially mandates levels, and leaves it up to the states to decide on which formulation to use to meet the EPA standards.

    20 years ago we had a refining and marketing system which produced and distributed the same products. Today we have a tower of babel comprised of 18 different “boutique” fuels, which eliminate the fungibility of supply. In California, if Long Beach were to blow up, there is no way refineries from other states can make up the shortfall, save repeal of the fuel standards.

    Bush at least tried to deal with this in his energy package last year.

    On Europe, they have been so successful in promoting diesel (at about 70% the cost of gas) that they are now spending millions to reconstruct old buildings destroyed by the sulphur emissions. We, on the otherhand, benefit as the US has become the dumping ground for gasoline (which Europeans can’t afford or use). C’est l’essence!

  9. We NEED $4.00 a gallon gas!
    Hardworking Americans are too used to cheap gas, and use it it to fill their status symbols, big SUVs, and pick-ups. We use it to blow off steam on vacations, and other recreation.

    But we don’t care how it affects the world, just that our appetiete for more, more, more be satieated.

    Well, bout time we give up the BIG status symbols and start drive smaller ones.

    Tax the crap out of gas and use the money to develop our own resi=ources, like, our oil fields and natural gas reserves as well as hydrogen.

    I drive an Isuzu pick up and a hyundai; i love $2.25 gas, no big deal. $19.00 bucks for a fill-up, aint a problem people.

    Its you 50 and $70 fill ups that get you freaks going.

    Ahh yes, the American way; “honey, we can just barley afford the Expedition, and if we cut back on eating out it won’t be a problem…” Uh oh, then gas goes from $1.60 to $2.30, YES! Bout dam time.

  10. We NEED $4.00 a gallon gas!
    Hardworking Americans are too used to cheap gas, and use it it to fill their status symbols, big SUVs, and pick-ups. We use it to blow off steam on vacations, and other recreation.

    But we don’t care how it affects the world, just that our appetiete for more, more, more be satieated.

    Well, bout time we give up the BIG status symbols and start drive smaller ones.

    Tax the crap out of gas and use the money to develop our own resi=ources, like, our oil fields and natural gas reserves as well as hydrogen.

    I drive an Isuzu pick up and a hyundai; i love $2.25 gas, no big deal. $19.00 bucks for a fill-up, aint a problem people.

    Its you 50 and $70 fill ups that get you freaks going.

    Ahh yes, the American way; “honey, we can just barley afford the Expedition, and if we cut back on eating out it won’t be a problem…” Uh oh, then gas goes from $1.60 to $2.30, YES! Bout dam time.

  11. We NEED $4.00 a gallon gas!
    Hardworking Americans are too used to cheap gas, and use it it to fill their status symbols, big SUVs, and pick-ups. We use it to blow off steam on vacations, and other recreation.

    But we don’t care how it affects the world, just that our appetiete for more, more, more be satieated.

    Well, bout time we give up the BIG status symbols and start drive smaller ones.

    Tax the crap out of gas and use the money to develop our own resi=ources, like, our oil fields and natural gas reserves as well as hydrogen.

    I drive an Isuzu pick up and a hyundai; i love $2.25 gas, no big deal. $19.00 bucks for a fill-up, aint a problem people.

    Its you 50 and $70 fill ups that get you freaks going.

    Ahh yes, the American way; “honey, we can just barley afford the Expedition, and if we cut back on eating out it won’t be a problem…” Uh oh, then gas goes from $1.60 to $2.30, YES! Bout dam time.

  12. We NEED $4.00 a gallon gas!
    Hardworking Americans are too used to cheap gas, and use it it to fill their status symbols, big SUVs, and pick-ups. We use it to blow off steam on vacations, and other recreation.

    But we don’t care how it affects the world, just that our appetiete for more, more, more be satieated.

    Well, bout time we give up the BIG status symbols and start drive smaller ones.

    Tax the crap out of gas and use the money to develop our own resi=ources, like, our oil fields and natural gas reserves as well as hydrogen.

    I drive an Isuzu pick up and a hyundai; i love $2.25 gas, no big deal. $19.00 bucks for a fill-up, aint a problem people.

    Its you 50 and $70 fill ups that get you freaks going.

    Ahh yes, the American way; “honey, we can just barley afford the Expedition, and if we cut back on eating out it won’t be a problem…” Uh oh, then gas goes from $1.60 to $2.30, YES! Bout dam time.

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