When I first got my driver’s license, I was 16 years old, living in Boston and it was 1963. The price of gasoline (regular, not “High-Test of “Ethyl”) fluctuated between 23 and 27 cents a gallon. Frequently neighboring stations, often at different corners of the same intersections would engage in gas ‘wars’ – trying to under price each other a penny or two at a time to garner the available business. It was, in those days, a very competitive situation. As though that were not enough, many of the gasoline dealers offered not only ‘full service’ (washing the windshield, checking the oil, etc.) but also inexpensive ‘gifts’ as premiums for doing business with them. Glasses, ash trays, savings stamps, etc. were common items. Those were different times. And the circumstances I have just described stand in stark contrast to today’s realities: gasoline at around $3.29 a gallon, all ‘self-service’ and no human available for anything most of the time. Ignoring the ‘extras’, let’s just focus on the price increase for a moment. Yes, gasoline is a lot more expensive than it once was (a multiplier increase of about X13)- with a lot of the substantial increases coming just in the past 5 – 8 years. This may be a part of why we Americans, I believe, have lost track of the fact that the prices of EVERYTHING have risen over these past four decades – for some things, a bit less and for others a bit more. But, everything taken into account, the increases in gasoline prices are not profoundly out of line with lots of other things. Let me offer just a few examples to illustrate my point.
The comparisons I will present are of a mixed sort – but all illustrate the fact that the increases in gasoline prices are not, when more closely examined and compared with other commodities, deeply out of line with other cost increases in the past 40 years. To begin with my personal experience: As I mentioned, gasoline prices averaged around 25 cents a gallon when I began to drive. At that time, I had a part-time job at one of the first McDonald’s burger places in Massachusetts and was paid the, then, legal minimum wage of $1.10 an hour. Do the math. For an hour’s wage, I could buy 4+ gallons of gas. Today, as a professional, my hourly wage is approximately $40. per hour. I am well aware that everybody does not earn the same wage – some earn more and many earn less – but I intend this as being only one of many points of comparative reference. Using the $3.29 figure as the current price of regular, unleaded gasoline, one hour’s work will pay for about 12 gallons of gas… an increase by a multiplier of X3. Back then, my family moved out of the city and bought a home in the suburbs of Boston for around $20,000. It sold five years ago for nearly $700,000. – an increase in dollar value of X35.
A few other random examples may serve to better make and establish my point. I was a smoker as a teen. A pack of Lucky’s cost 25 cents – just like the gasoline. Today, a pack of name-brand cigarettes can cost $4. or more. A net increase of around X15. The proportionate increase in that gallon of gas, lease remember, – from 25 cents to $3.29 is about X13.
The candy bar that used to cost 5 cents, now costs 59 cents – X11. Water was free! Now, many of us pay significantly more for a gallon of it in non-biodegradable plastic bottles than we do for a gallon of gas! When I worked at McDonald’s, the basic hamburger cost 15 cents. It now retails for about $1.29 at most locations – an increase of about X9. The first new car I bought myself (in 1968) cost $2,000 fully equipped. This year’s equivalent by the same maker costs about $22,000. – an easy to calculate increase of X11. The price of a movie admission, at night, was 35 cents in 1962. Today, it is getting close to (and in some cities, like New York has already reached) the unthinkable price of $10. An TRULY incredible increase of better than 28X. Bread, milk, eggs – nothing has been immune from price increases – many of them close to, equal to and even greater than that of our precious gasoline. I could go one and on – but I won’t. I think the point is made.
It is also important to remember that for a good many years, fuel prices to consumers here in the United States were artificially kept low through Federal subsidies to the refiners . The government had a HUGE investment in supporting the industries predicated on the continued and growing use of internal combustion engines (as it still, arguably, does) and the fuel subsidy was one way to help assure that Detroit was continually successful and that every American had and drove an automobile! In the past years, those subsidies have been substantially reduced – and although it is annoying to be paying so much more than we have become accustomed to while the oil companies report ever-increasing profits, it may serve us well to recall that in Europe, where those subsidies were never as much of a factor, gasoline has sold for upwards of $3. a gallon (or its metric equivalent) for MANY YEARS.
Finally, change comes hard with most things – and especially when it comes to costs that are increasing more quickly than are our earnings – and this has certainly been the case for retail gasoline for the past ten years or so. Increases of any kind, at any time are always the hardest on the most economically vulnerable members of our society – those living on fixed incomes. That remains the case everywhere with everything. However, there IS a bigger picture and it may behoove us to recall it from time to time. I am not an apologist for the fuel companies (who I DO believe are gouging us) of the government (which could develop and enforce price controls if it wanted to), but rather see myself as an economic realist with about sixty years of life experience to use as a measuring stick against which I can better understand the relativity of today.
Gas does cost more. But we are still driving SUVs. Wanting things both ways is a human attribute – but an ordinarily unrealistic one.