Gas At Historical Highs? Not Even Close When Considering Income is Also at Historical Highs
We hear a lot these days about how gas and oil prices are at historical highs. But what we don't hear much about is how personal income is also at historical highs. Per-capita personal income has almost doubled in the last 15 years, from about $20,000 in March of 1993 to almost $40,000 in March of 2008 (personal income data available here, and population data available here). The chart above (click to enlarge) shows the cost of 1,000 gallons of gas at average retail prices (data from EIA available here) as a percent of per-capita personal income, on a monthly basis from January 1980 through March 2008. Measured this way, gas prices through March 2008 aren't even close yet to the historical highs of the early 1980s, when 1,000 gallons of gas cost between 10-13% of per-capita personal income for 36 consecutive months, much higher than the 8.2% of per-capita income in March 2008.
The peak price of gas as a percent of income was in March 1981, when 1,000 gallons of gas cost 13% of per-capita disposable income. Gas today would have to reach a price of about $5.13 per gallon, before it would be an historical high adjusted for income.
9 Comments:
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. Has mileage driven per auto increased since 1980?
I assume that per capita personal income is mean rather than median. Chart the median to get a different picture. Median income is a better representation of the pump price of 1000 gallons of gas for the consumer.
It's at a historical high since I've been driving.
> It's at a historical high since I've been driving.
Which is irrelevant as a statement, since the price of something is always relevant to other measures in the society -- what's that notion, equating the price of everything in comparison to what it costs for a McD's "basic" hamburger -- this allows for differences in societies' base valuations, as a McD's burger is generally as cheap as they can get and is enough of a staple to have high demand if a society has any disposable income at all.
The biggest problem this statement raises, although I fully agree it's a very significant point, is that it has enough "proxy" elements to it that anyone is going to claim (not utterly incorrectly) that it is an "excuse" for the price of gas being as high as it is.
I know the value of comparing apples to apples, and this is clearly an effort to provide a real, apple-apple comparison... but it's contorted enough that there are definitely those who will discount it as an overly contorted excuse, not seeing the steps needed to give all prices (current and past) a common denominator for comparison.
While true that "a rising tide lifts all ships", most of the gains associated with that doubling in the per capita income have gone to the top 1%.
I'm no class warrior and I'll be the first to defend income inequality as just, but to present a more accurate picture, one needs to consider what's happening to people at the bottom as well as at the mean.
This chart would be far more telling if one plotted the cost of 1000 gallons of unleaded as a percentage of income by quintile, using 5 colored data series. I'll do that and post it back here.
Hey thomas blair, now your idea does sound interesting...
Can't wait to see what you come up with...
is says: "It's at a historical high since I've been driving"...
Mind you $4.00/gallon is nothing to toss off but as a percentage of my income its less than when Carter was fooling around with the economy...
I can't believe I am saying this, but I actually believe that something has to be done to stop the speculation in commodities. The recent oil report came out today and showed decreased demand and increased supply. The dollar is up huge today. And yet, OIL IS STILL UP BIG!
We have more oil in stock now than we did a year ago and oil is 100% higher now in price. This seems insane to me and perhaps people are right to say that highly leveraged hedge funds are keeping the price of oil at the levels it is at now.
Crony capitalist. You must be a Bush plant you phony.
Were there thousands of CEOs making hundreds of millions of dollar each pulling up that "per capita" number in 1980? Also, what is the debt service *per household* vs 1980?
If you would do some uncorrupted analysis, you might arrive at a relevant conclusion. But, you are a professor. Those that can't, teach.
Good day to you sir.
In the 1980s we were using even/odd license plates to determine when one was allowed to get fuel. There were many occassions when service stations simply ran-out of fuel. That was the supply side just not enough of the stuff. However, there is no rationing of fuel even/odd plates. There are no service stations in any of the 50 states running out of fuel. Yet, the price has substanially increased. Explain this aspect to me. Thanks,
TWJ
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