Tuesday, December 09, 2008

Real Gas Prices @ 6-Yr Low = $346 Billion Savings

The cheapest gas in the country can be found in Kansas City for as low as $1.25 per gallon, and the national average retail price for gas is now down to $1.69 per gallon. Without the high-priced states of Alaska ($2.60) and Hawaii ($2.57), the national average for the other 48 states is down to $1.65 per gallon, and the average price is below $2 in every state except for New York, Hawaii and Alaska.

Using real gas prices from the EIA (in December 2008 dollars), the chart above (click to enlarge) shows how today's gas prices compare to past prices. The last time real gas prices (national average) were as low as $1.69 per gallon was six years ago in December of 2002, and the last time real gas prices (national average) were as low as $1.25 per gallon (current Kansas City low price) was almost ten years ago in February of 1999 (see chart above). Gas prices in Kansas City are within 4 cents per gallon of the lowest-ever (national average) real gas price of $1.21 per gallon in February of 1999.

The $2.43 per gallon drop in gas prices from the peak of $4.12 per gallon in July to the current price of $1.69 represents $346 billion in annual savings for American consumers and businesses (1 penny fall in gas prices = $1.4235 billion annual savings, calculation here).

6 Comments:

At 12/09/2008 12:59 PM, Blogger Chris said...

After taking into account the fewer miles driven today the savings should be even greater.

 
At 12/09/2008 1:32 PM, Anonymous Anonymous said...

I must have been asleep in class when this was discussed - why are Kansas city prices so much lower?

 
At 12/09/2008 1:59 PM, Anonymous Anonymous said...

@ chris

I don't think there's fewer miles driven. There are millions more cars on the road today.

How about drastically increased MPG though.

 
At 12/09/2008 2:05 PM, Blogger Chris said...

I was curious if the same calculations were used as in this previous post:

http://mjperry.blogspot.com/2008/11/fall-in-gas-prices-less-driving-315b.html

 
At 12/09/2008 2:52 PM, Anonymous David Johnson said...

The plunge correlates to two things. The first is the financial meltdown. But I don't think that's the whole story. The other correlation is the restoration of order in Iraq. That certainly affects the futures market to some degree. Put the two factors together and I think it explains a lot.

 
At 12/09/2008 3:14 PM, Anonymous richard said...

In the Netherlands, gas is about 1.10-1.20 euro/liter. That's about $5.40-5.90 per gallon.

Mark says low gas prices are a kind of tax break for ordinary Americans. Imagine what kind of tax break you get if you get yourself an ordinary ICE 50 mpg car that costs less than $10k.

I understand the argument, but I am not sure it is all that relevant.

 

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