Saturday, July 05, 2008

And You Thought Today's Gas Prices Were High?

The chart above (click to enlarge) shows the cost of 1,000 gallons of gas as a percent of per-capita disposable income, annually back to 1929, using EIA data for gas prices and BEA data for disposable income and GFD data for population (subscription required).

The retail price of gas was only about 20 cents a gallon from 1929 to 1946, but annual per-capita disposable income in the 1930s was only about about $400-500 (about $6,000 in today's dollars), so that a 1,000 gallons of gas cost as much as almost 49% of per-capita disposable income in 1933, and averaged more than 38% from 1929-1939~!

To reach those levels today, gas would have to sell for between $14 and $17 per gallon!

Bottom Line: When it comes to gas prices, it could be a lot worse. It was a lot worse. A lot, lot worse.

As an exercise, consider your life today, your house, your cars, your appliances, your electronic equipment (Blackberry, iPod, laptop, cell phone, DVD player, etc.), your life expectancy, your income, gas prices today as a percent of your income, and your overall standard of living, and now go back several generations or more, and compare your life and standard of living today to your grandparents, great-grandparents, or whatever generation in your family background was around in the 1920s and 1930s.

I think you'll find that there's no comparison.
In most cases, you live like a millionaire compared to your great-grandparents, and in fact you have affordable modern electronic equipment like iPods, cell phones, and laptop computers (which are standard today even for high school students) that even a multi-billionaire couldn't have purchased in the 1930s! And as a percent of your income, gas today is still dirt cheap compared to gas in your grandparents' or great-grandparents' generations.


At 7/05/2008 4:36 PM, Anonymous Anonymous said...

Do you know what the cost of a "personal" computer was back in 1950?

What's the point? Is there room for raising computer prices without any complains, now that a computer is not a luxury but a necessary item?

I hope the speculators you defend won't get together to takeover all CPU makers and then raise prices to something like $20,000 per PC.

It will still be a fraction of per capita income. Not a multiple, as in 1950.

What's your point? You got mine.

At 7/05/2008 5:01 PM, Blogger Rob Pitingolo said...

This comment has been removed by the author.

At 7/06/2008 5:09 AM, Blogger OBloodyHell said...

> I hope the speculators you defend won't get together to takeover all CPU makers and then raise prices to something like $20,000 per PC.

Can't happen, numbnuts. The stuff is mostly SAND.

Yes, computers are silicon -- highly organized, carefully dirtied SAND.

In case you didn't notice that stuff, it's one of the more common substances on earth.

One of the reasons computers have gone from the size of a large room with the power requirements of a lit football field to the size of your fist running off of alkaline batteries is because people have learned one hell of a lot about making and organizing SAND.

When they can do the same with complex hydrocarbons (not beyond the limits of possibility) they'll solve the "oil problem", too -- although I personally suspect the place of oil is, one way or another, going to get usurped in the next 25-odd years (long before we "run out of it") by one of several technologies already in existence but ineffective (one bet: it won't be solar cells) or by some newly developed tech which we've figured out thanks to smart usage of that highly organized sand to develop an ever increasingly complete knowledge of how the universe works.

> What's your point? You got mine.

Well, if you comb your hair properly, it might not show quite so bad, though.

The current issues are nothing more than a sustained annoyance. As long as we keep the idiot politicos from f***ing with things, the current problems will sort themselves out.

Either the price of oil will go down, as people and companies respond, as they should, and figure out a way to increase supply, or they won't figure out a way, in which case people will respond, as they should, by finding ways to economize.

Damn, they just won't want those pointlessly gigantic SUV's after all...

Have you actually LOOKED at a Cadillac Escalade? There is just no friggin' sensible reason why most people can possibly justify such an assininely huge monstrosity of a car (I utterly defend their right to purchase one, mind you -- I'm just saying that if it weren't for gas being so low, no one would)

Ditto for Hummers. they will instead switch back to more economical cars.

The world just sucks, don't it?

Me, I still want my flying car that they promised me back in the 50s... I am soooo bummed!

At 7/06/2008 6:52 AM, Blogger Celal Birader said...

So it's back up to the levels it was in the 1970s ... for now. It might also be important to compare this data against the number of cars per household across the post WW2 period. My guess is that you will find in the 1950s many families did not even have 1 car; so they would not likely be buying even 1 gallon of gas with their disposable income. 2 or more car families appeared in the 70s so that any rise in this ratio is going to hurt now more than ever. So it probably really is worse now

At 7/11/2008 6:06 PM, Blogger J said...

Higher gas means higher prices where oil is needed, like food and whatever. Not a total picture. And ermmm. $4 gas!!!

crazy days


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