Gas Prices As Percent of Income Are Still Affordable
The chart above (click to enlarge) shows the cost of 1,000 gallons of gas at the retail price in each year from 1919 to 2007 using historical gas price data from the EIA, as a percent of GDP per capita in those years using data from Global Financial Data (paid subscription required).
1. As a percent of per-capita GDP to purchase 1,000 gallons of gas, gas prices in 2007 (about 6% of per-capita GDP) are still not even close to the levels reached in the early 1980s, when it cost 9-10% of per-capita GDP to purchase 1,000 gallons of gasoline in 1980, 1981 and 1982. It's true that the inflation-adjusted prices of gas and oil are now about the same as in 1981, but per-capita real GDP is almost twice as high today as then!
2. Except for the 1990s, gas prices today as a percent of per-capita GDP are lower than every other previous decade: the 1920s, 1930s, 1940s, 1950s, 1960s, 1970s and the 1980s!
8 Comments:
That won't last long as the FED cuts, the dollar will fall at least another 20%, OPEC seeing this rip off will cut or maintain production or even shift sells to countries that are not devaluing their currency and paying interest rates on sovereign bonds which are less then the rate inflation. This turkey is toast, about 75 banks are technical insolvent and more are headed to a big fall as forgein investors shun agency debt. Bend over here it comes get used to it.
Could you not update your 2005 article to show the price/1000 gallons in real disposable income or minutes worked? It may be more instructive than the GDP per capita metric.
How 'bout as a percent of real mean income?
Using average does those of us who want to spread this information no good because that is going to be exactly what is asked.
Oh yeah Mark this makes it all better now that we are better off than in 1919. Maybe I should get into the habit of putting away ruts n berries for the winter and drying the meat I kill with my daddy's rolling block.
In my previous post I meant 'median' not 'mean'.
I should clarify too that I was referring to updating the 2005 post. I'd like to see a chart of the price in relation to real median incomes.
If we can request such a thing.
OPEC chief Chakib Khelil said the Federal Reserve, not OPEC, is to blame for high prices. "The US slowdown and lower interest rates have lowered the value of the dollar, and encouraged speculative flows into oil and other dollar-denominated commodities. What's happening in the oil market is due to the mismanagement of the US economy, which is affecting the rest of the world," Khelil told a news conference.
Saudi oil chief Ali al-Naimi noted on March 4th, the growing influence of financial traders who have ploughed $200 billion into oil and commodity markets as a hedge against inflation and the weakening US dollar. "The current oil price has no relation to market fundamentals. It is linked to oil futures, which are witnessing tremendous speculation. There are even those who buy futures and speculate that oil prices will reach more than $200 in 2013," he told the London-based daily al-Hayat.
U.S. missteps in the Middle East have estranged Washington from some long-time allies in the region and made OPEC suppliers less inclined to rescue the top consumer from record oil prices that are battering an already-fragile American economy.
Tempers flared this week at the White House after OPEC rejected U.S. calls to boost production, helping to send oil to yet another record above $100 a barrel. OPEC officials blamed high oil prices -- which topped $106 on Friday -- on the mismanagement of the U.S. economy.
The comments highlighted the strained relationship between the United States and long-time Gulf allies like Saudi Arabia, which has been tested by the U.S. military occupation of Iraq, confrontations over Iran's nuclear program and the grinding pace of U.S. efforts to forward Middle East peace talks.
"The White House's fundamental problem is they don't have credibility with the issues that are important to OPEC, so they're not inclined to give us a break on price," said David Goldwyn, an energy consultant.
"There's no motivation right now for them to help us out with more production," Goldwyn said.
The White House said Bush was "disappointed" by OPEC's decision not to increase production when it met in Vienna on Wednesday, after the U.S. president said the group was making a mistake to let high energy costs weaken the important oil consuming economy further.
"If OPEC has decided they are not going to increase output, there's not a lot that the President can do," White House spokeswoman Dana Perino said on Thursday. "We don't control their decisions."
http://www.reuters.com/article/reutersEdge/idUSWAT00908320080307
Usāmah bin Muhammad bin `Awad bin Lādin Is laughing his ass off.
Both OPEC's unwilingness to increase production and the devaluation of the dollar have driven prices up.
OPEC is able to increase production and capacity but isn't doing either mostly for political reasons. This reminds me of Jimmy Carter and Iran. When Iran refused to hand over the hostages until Carter left office. I feel the same will be true with Bush.
There is an oil field in Saudi Arabia called the Khursaniyah Gas field. At peak production, it is expected to produce 500 thousand barrels of oil per day, half the production in all of Gulf of Mexico. It is one of the biggest oil fields yet to be tapped in the world. The oil field was supposed to be online in 2007, then it was pushed back to March, now it seems they are aiming to start it by the end of this year. This is what happens when governments seize production of resources. Supply and demand no longer drive the market, politics do.
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