Enjoy cheap gas while it lasts

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.

Fact Checking Cat Blasts Holes in GOP Chart

Great Depression Food Line (Photo credit: Kevin Burkett)

Warning:  If you are sick and tired of politics, don’t read this post.  Disclaimer:  I am sick and tired of politics and don’t plan to blog anymore about the elections until after November 6.  I just felt the need to respond to a right wing anti-Obama cheap shot.

I’ve seen this graph put out by an outfit called Being Conservative:

This is from the group’s facebook page which has over 2 million likes.  The graph above has been shared some 77,000 times.  And it’s misleading.  Here’s why:

First, let’s look at unemployment.  For a little historical context (because that’s what is lacking in the chart) in late 2008, the U.S. economy crashed under George W. Bush’s leadership.  When President Obama took over in 2009, he inherited the worst recession since the Great Depression.  I repeat, inherited an economy on the brink of utter collapse.  Thanks to the TARP bailout and ARRA stimulus spending, the economy has recovered, albeit slowly.  At the end of 2009, the unemployment rate was 9.3%, 9.6% in 2010, 8.9% in 2011 and now down to 7.9%; it is not 8.3% as the graph indicates.  For comparison sake, in the Depression Era from 1930-1939, the unemployment rate averaged 18.34%.  But get this, in years that would not be considered depression-like, the unemployment rates under Republican leadership were also high.  President Gerald Ford finished 1975 with an unemployment rate of 8.5%.  Under President Ronald Reagan, the unemployment rate at the end of 1982 was 9.7%; 9.6% in 1983.  At the end of 1992, under President George HW Bush (the elder), unemployment was 7.5%.

Now let’s look at gasoline prices. The graph shows that when the President took office, the price at the pump was $1.84; actually, the average price was $1.787.  It shows that the current price is $3.82 but that’s wrong too – it is, for the record as of this writing, $3.712 and for the year $3.684 on average, about 16 cents higher than it was in 2011.  For the sake of comparison, in June and July of 2008, under President George W. Bush, gas prices surged to over $4 nationwide.  I’m not making this stuff up.  To be fair, what is forgotten in all this is that the President has little direct influence on daily gasoline prices, which are largely a product of global events and global demand, that is higher now than ever before with India and China’s growing consumer class increasingly dependent on fossil fuels.  Now it is true that a comprehensive energy policy could impact the demand equation, but drilling isn’t the solution to lower gas prices.  Becoming less dependent on fossil fuels is the long term answer to a more sustainable planet.  As demand for oil decreases, so too will the price at the pump.  Investing in clean alternative energy sources not only could help us break our dependence on oil, it would reduce the amount of CO2 we spew into the air and slow down global warming and climate change, something I pray is not too late to do – I mean the ice is already melting and I believe it was Governor Cuomo who said, and I am paraphrasing, that we are seeing 100 year storms every two years.

Next, let’s look at the National Debt.  From Reagan through Bush I and II, the national debt increased by 12 trillion. This is not a misprint.  My cat Ella fact checked it.  How did they manage to rack up 12 trillion in debt? Well, it was a combination of reduced revenue from tax cuts, increased defense spending, unpaid for wars and ever expanding entitlement obligations, oh, and there is the not so little thing of the interest on the debt.  President Obama inherited this mess; he did not create it.  And he’s trying to work on the revenue side by raising taxes on the wealthy and ending corporate welfare, but with no cooperation from the Republicans who have all taken the Grover Norquist no taxes pledge. On the spending side, the President has ended the two Republican initiated wars (which of course had the full approval of Congress) and recommended reductions in military spending.  Now with the sequester set to trigger automatic cuts, there is hope that a balanced deal on revenue and spending can be negotiated.

And finally, declining wages.  Consider this:  The Republicans have blocked attempts to raise the minimum wage and voted against the Lily Ledbetter Fair Pay Act.  And corporations have been making record profits, as they have outsourced jobs and begged for more subsidies, arguing that the uncertainty is “killing” them and accounts for their reluctance to hire.  Notwithstanding this “uncertainty”, the rich have gotten richer and the middle class and poor even poorer.  Extending the Bush tax cuts didn’t help much.  An inherited wrecked economy that has recovered slowly, hasn’t helped things either.  Partisan gridlock has made matters even worse, that and the heightened rhetoric from the right questioning the need for a social safety net and blaming the poor, homeless, elderly and infirm for not taking responsibility for themselves.  The point being that the President is not solely responsible for declining incomes among the middle class.

I just wanted to give this graph a little context to show how misleading it is.  And now I am done.  The end.

Related articles

• Unemployment and Obama’s election prospects – Los Angeles Times (latimes.com)
• Big Spending Republicans (forbes.com)
• Okay, It’s Time For Some Actual Facts About Our Economic Recovery (businessinsider.com)
• A report card for Obama’s economy (bangordailynews.com)
• Consumers give US economy a lift before election (miamiherald.com)