Enjoy cheap gas while it lasts

2012_Nissan_Armada_Platinum_--_04-09-2012

because it won’t be around for long.  Yes, gasoline prices are nearing historical lows.  Interestingly, going back to 1972, 1998 was the year that gas prices hit rock bottom.  You’d have paid approximately $1.06 for regular unleaded, in today’s dollars, that would be about $1.50 per gallon.  I know you may be thinking of a time in the 70’s when you paid less than a dollar at the pump, but if you adjust for inflation, it’d be more like $2.60 per gallon today.  And I would guess your paycheck wasn’t as much in the 70’s as it is now, unless you’ve retired or live off the grid, or both.

When I got my first job in 1979 (not counting my paper route) I made $3.10 an hour.  I’d have been driving the family Chevrolet Impala then with a 21 gallon fuel tank. Gas at the pump at the local DX in Arkansas where I grew up would have been about .675 a gallon, and have cost me a little over $14.00 to fill up the gas loving Impala. $14.00 was about a half day’s work in 1978.  In 2015, the minimum wage or minimal wage if you like, in Arkansas is $7.50, and $9.00 in Massachusetts where I now live, so it would have taken me less than two hours to earn a tank full today.  Of course as a cash starved teenager, I no doubt skimped on the petrol and probably only put in a quarter of a tank.  Adjusted for inflation, that .675 would have cost about $2.44 at the pump today, quite a bit more than the $2.11 per gallon I paid yesterday to fill up my Honda Fit which has a considerably smaller fuel tank than the Impala, and is considerably more fuel efficient.

According to statistics from the website InflationData.com, historical gas prices adjusted for inflation from 1913-2013, have averaged $2.60/gallon.  They argue that when prices are above $2.60, gas is expensive, when below $2.60, cheap. Gas was cheap back in 1979 and is cheap today (as long as you make substantially more than the minimum wage) after about 6 consecutive years of brutally expensive gasoline prices. Thankfully, the forecast is for continued cheap gasoline through 2015, but beyond, don’t bank on it.  This is good news for airlines, bus companies and consumers and perhaps not so great news for big oil, aircraft manufactures (who have been promoting more expensive fuel efficient aircraft) and companies that have invested in clean energy technologies.

The current cheapness factor notwithstanding, now is not the time to buy a gas guzzling SUV or the largest, longest or most powerful car or pickup on the lot. Remember the cars of the 60’s and 70’s that took up like 2 city blocks to park? The 1967 Chrysler New Yorker got 9 mpg and weighed 4,442 pounds. The 1973 Cadillac Fleetwood, a monster of a car and one of the longest passenger cars ever built was 250 inches long, easily took up 3 regular parking spaces and weighed in excess of 5,000. By contrast, my Honda Fit is 161 inches long, gets 36 mpg and weighs a mere 2,496 pounds.

One way to keep oil prices low is to use less, so that demand remains lower than supply.  If you must drive a car, buy a fuel efficient one. Do you really need a Nissan Armada SUV that gets 12 mpg? The thing really is like an armed ship with wheels. Another way to reduce your dependence on fossil fuels is to build a tiny house in the woods, with a windmill and a still (optional) and get yourself off the grid completely because sooner or later, fuel’ll be expensive again. At least in the woods, you can hunt and gather your own food, raise some chickens, and barter with other people, if you happen to run across any.  Be sure to carry a quart of moonshine, some ginseng and a handful of pecans, useful and valuable alternatives to fuels and cash.

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