Professor Mark J. Perry's Blog for Economics and Finance
Thanks to a suggestion in a comment on a previous post by Mad Toothfish, the chart above shows the significant increase in fuel efficiency over time, based on "miles per gallon (m.p.g.)" data from the EIA (Figure 23) for passenger cars. Compared to 1973, when the average passenger car got only 13.4 m.p.g., fuel efficiency increased to 22.9 m.p.g. by 2005, a 71% increase in efficiency in a 32-year period!
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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Europe has been shielded from the effects of rising oil prices to some extent by the strength of the euro, European Commission President Jose Manuel Barroso told a French newspaper in an interview released on Saturday.
"Today we buy a barrel of oil at 66 euros, whereas if there were perfect parity, we would be paying more than 100 euros," Barroso told the weekly Journal du Dimanche.
"Of course we're concerned about this wide divergence in exchange rates, but at the same time we have to see that the so-called "strong" euro -- or rather the weak dollar -- has allowed us to cushion the impact of the rise in commodity prices," he said.
Barroso's remarks, which echoed several of his recent comments on the euro, came after the European currency traded at about $1.53 and U.S. oil prices hit a record high of more than $106 a barrel on Friday.
He said he had full confidence in the European Central Bank (ECB) and called for its independence to be respected, saying it would be a mistake for politicians to make comments on an appropriate level for the currency.
http://www.reuters.com/article/businessNews/idUSL088673320080309?feedType=RSS&feedName=businessNews&rpc=23&sp=true
Most of the increase in fuel efficiency has been due to the Japanese with the US auto makers kinking and screaming all the way, the US is highly dependent of gasoline for transportation unlike other countries who have had high gasoline prices for decades due to dollar hegemony that party is over and the US has sat on it's hands with respect to public transportation and mass transit. Turn out the lights the party is over.
So I guess the more than 71% decline in the value of the dollar makes it even worse now than in 1973.
Thank God for Japanese cars.
Concerning fuel efficiency, don't you think the left will just credit CAFE standards for it?
Are SUV's included?
Was Europe destined to have a crappy currency forever, no matter what policy they embarked upon?
This is important, because if the answer is "no," then a rise in the value of the euro was due to happen in the wake of lowering exchange and trade walls between the member nations on the continent. Could not that -- and smarter tax policy in many member nations -- mean a euro that has started to find its rightful place in the world?
Just because their currency gets stronger need not mean that ours is getting weaker. I'm not saying that we do not have some inflation concerns out there -- we learned this week that there is reason for paying attention.
But the value of the dollar vs the euro discussion reminds me a lot of the worries in the early 1970's about the US losing its trade advantages vs Asia and the rest of the world. Then as now, the critics forgot where the upstarts were coming from -- in that case off the close of WW2 when every industrial economy but ours was flat on its back.
From that baseline, we could not possibly have expected to retain our domination of world markets -- but that didn't stop the critics from worrying over it when others started to get healthy again.
Just because somebody else gets healthy does not mean you are getting sick. Economics is not a zero-sum game.
Was Europe destined to have a crappy currency forever, no matter what policy they embarked upon?
This is important, because if the answer is "no," then a rise in the value of the euro was due to happen in the wake of lowering exchange and trade walls between the member nations on the continent. Could not that -- and smarter tax policy in many member nations -- mean a euro that has started to find its rightful place in the world?
Just because their currency gets stronger need not mean that ours is getting weaker. I'm not saying that we do not have some inflation concerns out there -- we learned this week that there is reason for paying attention.
But the value of the dollar vs the euro discussion reminds me a lot of the worries in the early 1970's about the US losing its trade advantages vs Asia and the rest of the world. Then as now, the critics forgot where the upstarts were coming from -- in that case off the close of WW2 when every industrial economy but ours was flat on its back.
From that baseline, we could not possibly have expected to retain our domination of world markets -- but that didn't stop the critics from worrying over it when others started to get healthy again.
Just because somebody else gets healthy does not mean you are getting sick. Economics is not a zero-sum game.
Since you seem to have a great ability and source for getting historical information and putting them in a nice chart or graph, would this be a viable request?
We're told that inflation is running wild. It certainly feels like it, but how much is it being "told" to us and thus we believe it.
Without food and gas, inflation has been 'under control', right?
So how much of an impact is food and oil having on the average American?
We have information on the inflation adjusted price of oil/gas.
We have information on the fuel efficiency of cars now v. in the 70s.
Would you be able to determine the % of household income v. food/gas (then and now)? I know the price of cars/trucks these days have remained pretty stable for several years now...almost deflationary despite having way more technologies/features than even 5-10 years ago.
I know that heating oil and electricity has been creeping up, too, but again...the question I'm dying to have answer is - how much is this REALLY impacting the average person/family?
Yes, it would be interesting to consider what a gallon of gasoline cost as a portion of one's hourly take home pay in '79 versus today....
Random Useless Info has the following: Gasoline Price History
Funny, in 1973 my car was a 1.9L 4 cylinder car with a manual transmission, a German import. If I remember correctly, it would get a consistent 27 MPG.
Fast forward to today. My current car has a 1.9L 4 cylinder engine with manual transmission - In winter, I average about 33 MPG, the rest of the year around 36 MPG. Oh, and this one is made in the USA by GM and is almost 10 years old.
Oh and the cause of the difference in fuel economy of the two? Technology - electronic engine management controls and fuel injection systems.
Of the charts at the linked site, the one that stood out ot me was the US crude oil production - a long decline since the 70's for the 48 states and a decline since 1988 in Alaska.
It is unfortunate that we can't tap our own oil supplies but are willing to buy it elsewhere.
And we haven't done squat with nuclear recently either.
That's insanity.
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