Gas Prices and Inflation

Posted In: Gas News

Although newspaper headlines continue to proclaim that gas prices are at an all time high with oil trading for $39 a barrel, very few have taken the time to do any comparisons with the rising costs of all of the other items that Americans purchase every day.

If you actually take time to do the comparisons, however, the truth of the matter is that gas prices have actually increased at a much slower rate that the prices of other everyday staples. As a matter of fact, given that each dollar you earn today is only worth about half of what it was worth in 1981 - gas cost much more then than it does today.

Even though gas prices have increased on average of 30 percent this year, the reality of the situation is that gas is actually less expensive than it was in 1981. If this is true, however, why are the newspapers and news networks stirring up such a fervor? Gas prices are not the only costs that are rising, in fact, housing, groceries and medical care costs are also reaching all time highs - yet those issues don’t seem to be showing up on the front page.

Given that we are a nation that still places some sense of responsibility with our reporters of the news, we have a tendency to believe what we read. If the newspaper headlines tell us that we’re in a crisis and gas prices have reached an all time high, we believe them. The question then becomes… why? Who benefits when consumers are in an uproar?

The first guess would have to be the simpleist, maybe these stories just sell more papers. It’s a well known fact that headlines sell papers and news trailers get us to tune in to channels that are talking about the issues we believe we’re facing on any given day. Since we see the prices increasing every time we pull into a station to fill a gas tank, it’s not a stretch for us to believe what the media really only seems to be reinforcing. Of course, we’re interested in where things are heading in the oil industry - but we’re also concerned about housing, groceries, and medical care.

Why isn’t the media paying equal attention to these issues as well? I think we’d do well to stop and consider just how much influence the oil and automotive industries have over the media in the United States. It seems to me that by exaggerating the current situation serves them far more than it serves anyone else.

Consumers angry over the prices increases of fuel, for example, are far less likely to allow our government to raise gas taxes. Higher taxes on gasoline would further drive the price but would mean less profit to the oil executives. Likewise, Americans who are concerned about fuel economy, just might be a little more interested in trading in their old vehicles for the more “fuel efficient models” that are being advertised today.

Given the fact that the information on gas prices comes directly from the oil and automobile industry themselves, it becomes even more obvious that unless they wanted to create a furor, the headlines would be doing more comparisons to inflation and the news stories would instead be telling us exactly the opposite of what we’re reading today.

It’s a given that gas prices are less complicated topics than health care costs and the media is trying to appeal to a broad and generally ignorant market - in this day and age, however, Americans desperately need a press forum that won’t shy away from the complicated stories and is willing to hold the government accountable for what’s happening in our country.

So before you buy in to all the hype that is currently being generated, here are a few facts to consider.

1. Adjusted for inflation, gas was twice as expensive in 1920 as it is today.

2. If gas prices increased proportionate to inflation, using the price of gas in the 1970’s as a starting point, we’d actually be paying in the neighborhood of $6.00 per gallon at that pump.

3. If adjusted for wage increases, the price of oil is actually cheaper today than it has ever been.

The moral of this story is that you can’t believe everything you read or hear. Rather than jumping on the bandwagon that the media is trying to herd you onto, take the time to do a little research for yourself and get involved with the issues are fact instead of fiction.

If you really want something to get excited and upset about something - do a little research on the cost of medical care. That increase is a real problem in a real world, that nobody seems to be talking about.

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