Wednesday, May 07, 2008

Gas At $3.56 Per Gallon Is A Bargain, Adjusting for The 71% Increase in Fuel Efficiency Since 1973

From an anonymous comment on this CD post about gas prices as a percentage of income:

"You should further adjust the data for increased fuel efficiency per mile travelled and average mile driven per auto. 1000 gallons of use in 2008 moves an auto at least 50% further than in 1980."

In response, the chart above shows the average annual miles per gallon for passenger cars, from 1949 to 2005 (EIA data available here LINK NOW WORKS). From a low of 13.4 m.p.g. in 1973, fuel efficiency increased by 71% to 22.9 m.p.g in 2005 (most recent year available), and by 43% since 1980 (14 m.p.g.).

Bottom Line: Adjusting for both increased fuel efficiency and the significant increases in income since 1980, gas today is a bargain, even at $3.56 per gallon (price I paid today in Michigan).

12 Comments:

At 5/07/2008 3:27 PM, Anonymous Anonymous said...

The problem with this graph is that it is for passenger cars, not all vehicles on the road. Since trucks (and SUVs) sales have increased so much, the average miles per gallon for vehicles on the road has actually declined in the last 20 years.

But overall the point is very correct - being heavily subsidized by the government, automobile travel is very cheap.

 
At 5/07/2008 3:58 PM, Anonymous Fred said...

Dear anonymous,

There is no problem with this graph.

My SUV, a 1995 Pathfinder, gets 20 miles per gallon. Find that on the graph. Do you see that my old Pathfinder is ONE mile per gallon short of the 1995 average?

 
At 5/07/2008 4:21 PM, Blogger Dave Narby said...

Yeah, sure...

But the big rigs which haul everything we buy don't get 71% better MPGs, so everything ELSE you buy now costs more as a result of high fuel costs.

I'd also like to see a cost per mile comparison with '73. Think that would be more informative IMO.

 
At 5/07/2008 5:56 PM, Blogger Marko said...

This comment has been removed by the author.

 
At 5/07/2008 10:35 PM, Anonymous Lord said...

What are you smoking? As I recall, gas ran about $0.35 a gallon back then and my fuel efficiency increased only 54% and, in fact, declined since 1990. (I was rather shocked by that when I purchased a new car.) No, gas is no bargain.

 
At 5/08/2008 1:37 AM, Anonymous Anonymous said...

The fact that gasoline is a bargain is lost on those that sit home at night unable to afford to drive anywhere but to and from work.

 
At 5/08/2008 1:53 AM, Blogger randian said...

"The fact that gasoline is a bargain is lost on those that sit home at night unable to afford to drive anywhere but to and from work."

What's your point? That there are people who are economically marginal? The fact that anything is a bargain would be lost on them. What do you propose we do about it? As you said, gas is cheap. Being so unproductive that an extra $100 a month buries you is usually a self-inflicted condition.

 
At 5/08/2008 3:40 AM, Blogger juandos said...

anon @ 3:27 PM whines: "The problem with this graph is that it is for passenger cars, not all vehicles on the road. Since trucks (and SUVs) sales have increased so much, the average miles per gallon for vehicles on the road has actually declined in the last 20 years"...

Well here's your chance to get some credible info to prove your allegation that the graph is inaccurate...

dave narby whines: "But the big rigs which haul everything we buy don't get 71% better MPGs, so everything ELSE you buy now costs more as a result of high fuel costs."...

Again another statement lacking any credible source for it...

Got a problem with gasoline/diesel prices, call Nancy Pelosi and the rest of the Dems...

 
At 5/08/2008 7:20 AM, Blogger jth said...

Wow, juandos...very classy, calling people whiners. Seeing as the link to the source in the article is broken, it's pretty tough to analyze where that data came from. And seriously? Call a Democrat? It seemed to me this discussion was about fuel prices and economy, not politics.

And randian, very self-righteous viewpoint you have there...essentially, if you're poor, it's your own damn fault. No one here said $100/month "buried" anybody, but it has forced changes in behavior, altering standards of living. You need look no further than any auto dealer's truck lot to see that. Where this change may be harder to stomach is if we're talking about our grandmothers on fixed-income. But we're not far down that road yet; maybe granny only makes it to bingo three times a week for a few months. But if fuel jumps to $5/gal quickly (I expect it will by December), that may be a different story.

Alright, enough of that. On to my comment.

According to Figure 2 here, large-truck fuel economy has moved from around 5.75 miles per gallon in 1980 to 7.25 in 2005. Not quite 71%...

Both anonymous and fred have a point, the average fuel economy of cars on the road today may be lower than stated; I can't actually get to the source document linked from the posting, but I'm assuming the numbers used are average of vehicles available, maybe even average fuel economy of all vehicles sold. Either way, I doubt that's counting large trucks.

Anonymous' statement about the point being lost on those sitting at home is not that there are people in the margin, it's that rapidly elevated fuel prices are putting more people in that margin. This may also be as a result of the recession/inflation combination, but gas prices aren't helping anybody out in that arena.

 
At 5/08/2008 7:25 AM, Blogger Mark J. Perry said...

The link to the EIA data on gas mileage is now fixed, sorry about that.

 
At 5/08/2008 7:30 AM, Blogger randian said...

"And randian, very self-righteous viewpoint you have there...essentially, if you're poor, it's your own damn fault."

How many able-bodied permanently poor adults have you met whose economic circumstances aren't their own damn fault? I've never met one. Besides which, a middle class wage earner up to their eyeballs in debt from buying toys can be just as hurt by a $100 increase in gas as any poor person.

 
At 5/12/2008 12:26 AM, Blogger Bryce said...

I hope you'll take a moment to thank the meddlesome bureaucrats who actually mandated those efficiency standards, and maybe say an unkind word about the visionary capitalist heroes who have continually stonewalled such measures.

I did some quick calculations, and if the 35MPG standard was in effect today (currently it is being phased in by 2020), the fleet would consume about 30% less fuel, saving about 6B barrels of oil a year (a number a bit short of the total reserves in ANWR). At today's prices, that's $600B a year we could be funneling into a second, third, and fourth Middle Eastern quagmire.

The number is, of course, optimistic, since it doesn't account for non-transport uses of oil, or for fleet turnover. So call it $300B. Still plenty of money to launder to Halliburton through Iran.

Remember, the auto industry screamed about how increased fuel standards would lead to the death of the auto industry and carnage on our highways. They resurrected the same zombie arguments against this round of increases, and I'm sure their warnings will prove just as misguided this time around.

Now that the Prius is outselling the Excursion by 2 to 1, maybe the Big Three are thinking that these eco-weenie cars might not be such a bad idea.

 

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