Guest Post by Eric Peters
Did you know that gas is cheaper now than it was 50 years ago?
It may not feel it . . . but:
Find an inflation calculator; for example the federal government’s Bureau of Labor statistics Consumer Price Index calculator (here). Select 1965 as your starting year. Enter 30 cents – the cost of a gallon of gas back then (here). Then select 2016 (2017 data isn’t yet available) and – look at that – $2.29.
About what a gallon of unleaded sells for today.
Actually, it sells for less – because a chunk of that $2.29 you’re spending isn’t for gas.
It’s for taxes.
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Which are high – and (as authoritarian leftist “progressives” like to style it when it comes to everything else) extremely regressive. They are disproportionately high relative to the price of the item itself. An item that is a necessity for most people.
On average, the price of a gallon of gas includes about 48 cents in federal and state/local taxes. The gas itself really costs about $1.80.
That’s about 24 cents in 1965 money.
And it’s actually less than that – because much of what you are buying today isn’t gas – or taxes.
It’s ethanol.
Ten percent of each gallon, in most areas.
Gas was gas back in 1965, no adulteration. It took you farther, too – because 100 percent gas has more energy in it than 90 percent gas and 10 percent ethanol. The Corn Con costs us up front – and down the road.
Gas was also not as expensive to refine – and distribute – as today. In part because of the Corn Con (corrosive, water-attracting ethanol alcohol requires special handling) and also because of regulatory costs that are much higher now than they were back then.
That goes doubleplusgood for diesel, which is much more expensive to refine today than it was 50 years ago. Federally mandated Ultra Low Sulfur diesel fuel often costs more than premium unleaded.
But gas is cheap.
Cheaper than it used to be.
It’s hard to know, exactly, because of all the variables in play, but there can be no doubt that despite the taxes, the regulatory add-on costs and the Corn Con, a gallon of gas still costs less today than it cost more than 50 years ago.
This is even more astonishing when you take into account the fact that the population of the country has more than doubled since 1965 and along with it, the number of cars on the road and the driving being done. More fuel is being consumed today than 50 years ago – and not just fuel, either. Demand for everything else made out of or otherwise dependent on oil – which is almost everything – has also increased.
Now fold in world demand – which has probably doubled if not quadrupled. China, just to cite one huge variable, was a mostly peasant country back in 1965 that ran on rice – not oil. It is not a peasant country today. GM sells more cars there than it does here.
Yet gas is cheaper than it was back when Lyndon Johnson was president – and Mao was chairman.
If the world is really running out of oil – Peak Oil theory, always just around the corner – it follows that the actual cost (i.e., adjusted for inflation) of gasoline should be going up. You don’t generally pay less for things becoming scarce. Especially when demand for them is high – and likely to rise.
Whether because advances in technology have made formerly economically unreachable oil economically recoverable or because new fields have been found that have greatly increased the available supply or (longshot, but it’s possible) oil is actually abiotic – and so, renewable – there appears to be plenty of the stuff on tap.
Don’t sweat supply.
Sweat the taxes – and the money manipulations.
A gallon of gas only appears to cost more because you need more paper dollars to buy the same thing now vs. then.
Even with the regressive taxes folded in. Despite the higher costs involved in refining it and getting it to market. Plus the cost of the Corn Con.
If it weren’t for those things, gas would be literally cheaper than water, probably.
But in real terms, it is still cheap. Or at least, it doesn’t cost more now than it did back in ’65.
So, the next time you fill up, don’t curse Big oil.
Condemn Uncle . . . and the Fed.
“Gas was gas back in 1965, no adulteration.”
Not quite, remember tetraethyl lead?
FWIW, current unleaded gas, during the season where oxegenates aren’t being added or where they aren’t required is purer and more highly refined gas than back in 1965.
Considering this, the added labor and processing, that makes gas even cheaper now than in 1965 if just comparing price alone.
Probably, IMO anyway, the best comparison would be in terms of the percentage of average income the average person or family spends on something. That would give a real lifestyle standard of the value of the dollar adjusted for average income.
I don’t think those figures are readily available in a processed form and the research to determine them would be beyond most peoples amateur resources.
In 1965, the % of income spent on gas was probably a good deal lower. This was pre-sprawling suburbs. Working people didn’t typically drive 30 plus miles each way to work because cities weren’t all ‘diversified’ back then, and inner cities weren;’t total shitholes with bad school. I use most of my gas driving to work and back, and I think most people do to.
As long as you can buy all the gas you want, any time you want it, everywhere you want to buy it, it is cheap, regardless of the number of pieces of green paper you trade for it. When the limits on purchasing come (and they wil) the price charged will no longer matter, and gasoline will be another political spoil to be distributed to the rightthinkers. And denied to deplorables.
In 1965 you not only got gas at a ‘service station’, some kid pumped it, cleaned your windshield, checked your oil ( necessary back then) and gave you trading stamps, a steak knife or some other trinket with your fill up.
The problem with oil sustainability is that we are consuming the giant oil fields of the past. We just don’t find new Ghawar, Prudhoe Bay or North Sea oil fields anymore. It is the cost of the marginal barrel of oil that should concern us not the blended cost of a barrel from all sources. If that marginal barrel is not profitable at current prices it won’t get produced absent a subsidy or some sort of financial legerdemain like ZIRP/NIRP. If existing low cost field production is declining by a million barrels per year some mechanism must be in place to replace that capacity or a future problem will be inevitable.
Gail Tverbergs website explains the dilemma much better than I can but suffice to say low prices do not always mean ‘abundance’. They can as easily imply that the marginal cost of production is not economic.
In the 60s you could still legally buy Cherry Bombs ,M-80s and 10n10 s.I n the early 70s you could still buy these fire crackers on the black market.I set the backyard on fire one day in 1974 .I remember you could buy gas for 50 cent a gallon. Now you get caught with explosives you could go to prison .Gas is over 2.00 a gallon ..Why did YOU People let this happen to our great nation.Meatheads
So that’s your beef, cherry bombs? Surely you could stop at Bowlin’s right by Lordsburg and pick up a Benjie’s worht of fireworks.
I grabbed $40 worth and the lady asked if I had enough, I said, your right, I need $10 more…
The beautiful blonde said there was lead everywhere. Then I recalled lead was added to lower octane gas to reduce the knock. Then I read that a scientist wanted to reduce lead in gasoline so he could conduct experiments in a lead-free environment. Then I read that gas is formulated with corn alcohol to increase the octane in lead free gas. Then I noted that gas is reformulated seasonally to increase the oxygen in gas. Then I noted that nobody gives a shit about pollution anyway, they just want gasoline for their Ford F-3500 so they can go 120 MPH to get somewhere they were not at a half hour ago like their presence was in such great demand.
Eric finally found a topic worth bitching about? He’s about 8-9 years late to the party but better late than never.
Indent Service , blow El Coyote .
Tonight, diesel is 2.39/gallon in current money at my local station. This is less than 20 cents/gallon in silver coinage calculated for melt value.
1946-1964 Roosevelt Dime $0.10 $1.2977 <—silver melt value in current money
1932-1964 Washington Quarter $0.25 $3.2444 <—- silver melt value in current money
I have attempted to explain countless times that gas food etc… has not gone up in price , the $DOLLAR$ has gone down in the value thanks to our scatterbrained policies in nearly all actions taken by our government ! It was a deliberate back door tax screwing every average American out of nearly everything that made this country what it once was ! And god forbid the Washington elites coupled with K-Street and Wall Street get together to fix anything , we are all still bleeding from our assholes thanks to 40 years of them looking out for the little guy !