Barack Obama thinks the government should intervene on gas prices to “give families some relief,” and last week called for releasing 70 million barrels of crude from the Strategic Petroleum Reserve. John McCain proposes an end to the ban on offshore drilling and has pushed for a gas-tax holiday because “we need it, we need it very badly.”
But both candidates and the public are evidently unaware of a basic fact: Gasoline is more affordable for American families now than it was in the days of the gas-guzzling muscle cars of the early 1960s. Prices are beginning to come down somewhat, but this was true even when the national average was at its summer peak.
Two-thirds of American voters say they think that the price of gas is “an extremely important political issue,” and many believe that it will cause them “serious” financial hardship, according to a recent survey by the Associated Press and Yahoo.
Although it’s true that the real (inflation-adjusted) and nominal (posted) prices of gasoline are higher than at any time since World War II, even at the recent peak national average of $4.11 a gallon (California’s average Friday was $4.17), gasoline is still more affordable today than it was during the Kennedy administration. Federal Reserve Chairman Ben Bernanke worries that increasing fuel prices might eat up so much disposable income that it flat-lines consumer spending and tanks the economy. But it’s difficult to square that worry with what we call the “affordability index” — the ratio of the average person’s disposable income to the price of gasoline.
Fifteen years ago there were those saying why increase drilling? It will take 10 to 15 years to have an effect on supply and prices. Because they had their way, we are still in the same boat today. I hope those who are singing the same song today do not have it their way.
Interesting article. My disposable income is higher than my parents. But do I want to dispose of it to the Arabs?
In an off-topic tangential internet fashion, I followed a link to another interesting op-ed piece that you might want to consider linking, too:
[url=http://www.latimes.com/news/opinion/commentary/la-oe-goldberg12-2008aug12,0,6742318.column ]Obama without his script
Judging by his reaction to the Georgia-Russia crisis, Obama’s make-believe presidency isn’t ready for prime time.[/url]
That link didn’t come out. Try
[i]Obama without his script –
Judging by his reaction to the Georgia-Russia crisis, Obama’s make-believe presidency isn’t ready for prime time.[/i]
here: http://tinyurl.com/5o7cly
Darn that Obama, traveling all over the place, trying to act presidential, what a joke. No, wait…darn that Obama, going on vacation instead of acting presidential when Russia goes on a rampage. Thank goodness Bush was here where he belonged. No, wait, darn that Bush hanging out at the Olympics while Russia goes on a rampage. Whew! Thatnk goodness McCain was on the job!
If “real (inflation-adjusted) and nominal (posted) prices of gasoline are higher than at any time since World War II”, how exactly is gasoline “still more affordable today than it was during the Kennedy administration”? It costs more in [b]inflation-adjusted dollars[/b], for goodness sake! Just because some other things cost less today than they did then, we should be happy to pay more now for gasoline? That’s utter nonsense! By the way, we had a currency back then that wasn’t devoid of any intrinsic value like the current fiat Federal Reserve Notes. Back then, you could take your dollar and redeem it for silver. Try that today!
Another thing that makes comparisons like this ridiculous is the difference between pensions of yester-year and the 401k’s of today. Back then; there was such a thing as loyalty in the corporate world and responsibility. Now, we are forced to put a large portion of our “disposable” income into the risky stock market to attempt to finance our own retirements. That “disposable” income starts to look pretty small when you factor in things like IRA’s, 401k’s, and health insurance.
And another thing…if gas is so stinking affordable, why are airlines going broke and all sorts of fuel surcharges being passed on to consumers? Why does the stock market start to tank when the price of oil goes up, if it is so affordable. This article is outrageous!
Sick & Tired, Thanks for your post! The article is indeed absurd, and you sliced it to ribbons.
Sorry, meant to add: The authors of this editorial are from The Cato Institute…that explains everything, especially their deliberate blindness to the havoc wreaked upon the middle class in the past 40 years!