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February
13
2017

Gas Doesn’t Cost More . . . Our Dollars Are Worth Less
Eric Peters

Did you know that gas is cheaper now than it was 50 years ago?

It may not feel like it . . . but:

Find an inflation calculator; for example the federal government’s Bureau of Labor statistics Consumer Price Index calculator (here). Select 1965 as your starting year. Enter 30 cents – the cost of a gallon of gas back then (here). Then select 2016 (2017 data isn’t yet available) and – look at that – $2.29.

About what a gallon of unleaded sells for today.

Actually, it sells for less – because a chunk of that $2.29 you’re spending isn’t for gas.

It’s for taxes.

Which are high – and (as authoritarian leftist “progressives” like to style it when it comes to everything else) extremely regressive. They are disproportionately high relative to the price of the item itself. An item that is a necessity for most people.

On average, the price of a gallon of gas includes about 48 cents in federal and state/local taxes. The gas itself really costs about $1.80.

That’s about 24 cents in 1965 money.

And it’s actually less than that – because much of what you are buying today isn’t gas – or taxes.

It’s ethanol.

Ten percent of each gallon, in most areas.

Gas was gas back in 1965, no adulteration. It took you farther, too – because 100 percent gas has more energy in it than 90 percent gas and 10 percent ethanol. The Corn Con costs us up front – and down the road.

Gas was also not as expensive to refine – and distribute – as today. In part because of the Corn Con (corrosive, water-attracting ethanol alcohol requires special handling) and also because of regulatory costs that are much higher now than they were back then.

That goes doubleplusgood for diesel, which is much more expensive to refine today than it was 50 years ago. Federally mandated Ultra Low Sulfur diesel fuel often costs more than premium unleaded.

But gas is cheap.

Cheaper than it used to be.

It’s hard to know, exactly, because of all the variables in play, but there can be no doubt that despite the taxes, the regulatory add-on costs and the Corn Con, a gallon of gas still costs less today than it cost more than 50 years ago.

This is even more astonishing when you take into account the fact that the population of the country has more than doubled since 1965 and along with it, the number of cars on the road and the driving being done. More fuel is being consumed today than 50 years ago – and not just fuel, either. Demand for everything else made out of or otherwise dependent on oil – which is almost everything – has also increased.

Now fold in world demand – which has probably doubled if not quadrupled. China, just to cite one huge variable, was a mostly peasant country back in 1965 that ran on rice – not oil. It is not a peasant country today. GM sells more cars there than it does here.

Yet gas is cheaper than it was back when Lyndon Johnson was president – and Mao was chairman.

If the world is really running out of oil – Peak Oil theory, always just around the corner – it follows that the actual cost (i.e., adjusted for inflation) of gasoline should be going up. You don’t generally pay less for things becoming scarce. Especially when demand for them is high – and likely to rise.

Whether because advances in technology have made formerly economically unreachable oil economically recoverable or because new fields have been found that have greatly increased the available supply or (longshot, but it’s possible) oil is actually abiotic – and so, renewable – there appears to be plenty of the stuff on tap.

Don’t sweat supply.

Sweat the taxes – and the money manipulations.

A gallon of gas only appears to cost more because you need more paper dollars to buy the same thing now vs. then.

Even with the regressive taxes folded in. Despite the higher costs involved in refining it and getting it to market. Plus the cost of the Corn Con. 

If it weren’t for those things, gas would be literally cheaper than water, probably.

But in real terms, it is still cheap. Or at least, it doesn’t cost more now than it did back in ’65.

So, the next time you fill up, don’t curse Big oil.

Condemn Uncle . . .  and the Fed.      

If you like what you’ve found here, please consider supporting EPautos.

We depend on you to keep the wheels turning! Especially this month; we’re low – see the pie chart on the main page.

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Eric started out writing about cars for mainstream media outlets such as The Washington Times, Detroit News and Free Press, Investors Business Daily, The American Spectator, National Review, The Chicago Tribune and Wall Street Journal.

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