1918-2000 Gas Prices in Constant Dollars

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I hope the chart actually comes out correctly. If not, go the following link:


The chart shows gas prices in constant 2000 dollars. Would you have guessed the highest price we ever paid for gas was 1918?

-- Jim Cooke (JJCooke@yahoo.com), March 18, 2000


Rats! Let me try that chart again.

-- Jim Cooke (JJCooke@yahoo.com), March 18, 2000.

Now, the rest of the chart!

-- Jim Cooke (JJCooke@yahoo.com), March 18, 2000.

Great chart.

I've been wondering about how prices now really compared to the '90-'91 prices they keep referring to.

This is a "keeper." Thank you.

-- Pam (jpjgood@penn.com), March 18, 2000.

Why do we always go on about how cheep gas is compared to years past? Look at some other items that are common today with the same eye and you will see that in light of production improvements lots of stuff is cheeper today. Compare VCRs and Computers over the years for example. Then look at Cars. I had a 1968 Chevy Caprice one time that listed for $3600 or so new. compare that to the nearly 10fold increese in price for a new 2000 model year Caprice. If computers had done the same thing as cars, we'd be paying $10,000 for a modest midrange unit today. It got cheeper to make them over time due to production improvements and moving production to less expensive job markets. Also things like profit come into the mix. Go buy a common computer part at a major chain then go price one at a mom and pop shop and you will see what volume can do for pricing. More oil produced lowers the profit per amount needed to have a thriving business.

Just my 2cents worth.

-- Just passin through (nobody@nowhere.com), March 18, 2000.


"Why do we always go on about how cheep gas is compared to years past?"

We "go on" about it because people have looked at price charts from the past and didn't consider that the value of the dollar in 1960 was NOT equal to the value of the dollar in 2000. THIS price chart is corrected for inflation and that correction is wherein lies its value.

-- Anita (notgiving@anymore.thingee), March 18, 2000.

Now let's convert the Numbers into "Hours worked per Gallon of Gas",then and now.

-- Waiter (go@it.sam), March 18, 2000.


That's a good question. I went to http://www.ssa.gov/OACT/COLA/AWI.html#Series to get the average annual wage from 1951 to 1998. To simply matters (it is Saturday, after all), I created an Excel table with wages for 5 year periods to 1998. Since there's no data for 1999 and 2000, I assumed the annual wages went up by $1000 for both years. I assumed that gas for 1999 was the same as 1998 although I think it was actually lower in 1999. For 2000, I used $2.00 per gallon. I then divided the annual wage by 2080, the standard Labor Department average for number of hours worked in a year, to get hourly wages.

I hope the table comes out in readable format. It shows that we worked about 12 minutes to buy a gallon of gas in 1951 and 1980, the most expensive time for gas. We are currently working about 8 minutes to buy a gallon of gas. The least expensive time was 98/99 when we worked about 5 minutes to buy a gallon of gas.

Year Annual Hourly Gas Hrs Worked per Gallon 1951 2,799.16 1.35 0.2715 0.20 1955 3,301.44 1.59 0.2907 0.18 1960 4,007.12 1.93 0.3113 0.16 1965 4,658.72 2.24 0.3115 0.14 1970 6,186.24 2.97 0.3569 0.12 1975 8,630.92 4.15 0.5670 0.14 1980 12,513.46 6.02 1.2210 0.20 1985 16,822.51 8.09 1.1960 0.15 1990 21,811.60 10.49 1.2170 0.12 1995 24,705.66 11.88 1.2050 0.10 1998 28,861.44 13.88 1.1150 0.08 1999 30,861.44 14.84 1.1150 0.08 2000 31,861.44 15.32 2.0000 0.13

-- Jim Cooke (JJCooke@yahoo.com), March 18, 2000.

Do that hours worked thing for VCRs and computers along with cars and houses. Things don't have to stay the same. If the production of gasoline is less expensive now than in the past, why would the cost at the pump be higher. Look at the supply end of the chain to find out if the price is right. Just because I make more money today then 30 years ago doesn't mean I should pay more for gas.

-- Just passin through (nobody@nowhere.com), March 18, 2000.


You said: "If the production of gasoline is less expensive now than in the past, why would the cost at the pump be higher. Look at the supply end of the chain to find out if the price is right. Just because I make more money today then 30 years ago doesn't mean I should pay more for gas."

The PRODUCTION of gasoline is NOT less expensive now than in the past, anymore than the cost of MILK production was less when farmers hand-milked versus when they went to machines. Your examples of VCR's and computers versus oil and milk are akin to comparing apples to oranges. The chart presented does NOT represent changes in PRODUCTION costs. It represents changes in the value of the dollar today versus previous years.

The point in ALL of this is that you're NOT paying more today than you were before for gas at the pump. You're actually paying a lesser percentage of your wage today than you did in years past. It actually costs MORE today to PRODUCE crude. Crude oil is NOT akin to technology that first tests a market and once seeing a marketplace moves on to develop more efficient ways to reduce the price. Wells run dry and development costs on NEW wells cost a GREAT deal.

-- Anita (notgiving@anymore.thingee), March 18, 2000.

I apologize for screwing up the milk example. The intent was to demonstrate that mechanized milking is NOT cheaper for a farmer than to perform the task by hand.

-- Anita (notgiving@anymore.thingee), March 18, 2000.


My point would be similar to Anita's. Most of the things that have decreased in actual dollars, like VCR's and computers have done so because the materials and the manufacturing methods have also decreased in actual dollars as the demand for the products grew. Oil, like many commodities, is not driven by cost of production alone but also by artificial constraints (OPEC, refinery problems, etc.) and market psychology. If there were an OPEC equivalent for the VCR and computer markets, what would you think the effect on prices would be?

-- Jim Cooke (JJCooke@yahoo.com), March 18, 2000.

In reply to that I would say that it is cheeper to buy from OPEC than to pump it out of the ground in the United Stated due to production costs such as labor and meeting the environmental restrictions. It might be cheaper to refine here or nearby due to shipping costs for example. Thus the total cost of production is cheaper now than in the past in fixed dollars, or the oil companys made a whole lot more money per gallon sold in the past than now.

OPEC might be meeting the current cost for Y2K repairs or overtime for production workers or have decided that they don't make enough profit and are fixing that. At any rate, if they could sell for $12 per barrel, I doubt it was at a loss. If they have to sell it for $30 per barrel now, some part of the financel equation has changed. Eather its the cost of production or profit level. The only factor on the radar is Y2K that would affect production costs that I know of, so I'm guessing its a profit motivated increase.

Just my nickles worth(adjusted for inflation).

-- Just passin through (nobody@nowhere.com), March 18, 2000.


I'm no oil expert so I have no idea if any of your ideas are true. The one thing I know is that cartels always raise prices to the point that volume doesn't decrease more than the additional profit offsets the declining volume. OPEC is acting the way that all cartels act and have probably gotten prices just over that imaginary line which is why we're seeing a decline in prices now. There's no evidence I've seen that says Y2K has any relationship to oil prices. If that was true I'd expect to see gold prices rising as the fear factor takes hold and we haven't seen that either.

-- Jim Cooke (JJCooke@yahoo.com), March 18, 2000.

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