By nearly any measure, gasoline is still a bargain throughout the United States,
cheaper now than at almost any time since people started driving cars
Star Tribune, June 22
Editorial: The real problem is that gas prices have been too low
It will be interesting, though academic, to see what the Federal Trade Commission finds out about why Midwestern gasoline prices have climbed so far above the U.S. average.
Perhaps oil companies have been using price trends to cover a bit of gouging, as the White House contends. Perhaps new federal requirements for cleaner, reformulated gasoline are the main culprit, as the industry asserts (with some credible backing from the Congressional Research Service in a report issued yesterday).
Probably there will be blame to go around, but the details will count for little at the gas pump. Prices are widely predicted to start subsiding soon; even if reformulated gasoline is shown to be a major factor, the Clinton administration is not disposed to ease its requirements, nor should it be.
The fact is that by nearly any measure, gasoline is still a bargain throughout the United States, cheaper now than at almost any time since people started driving cars. Many such measures are reviewed in a recent report from Cambridge Energy Research Associates, confirming in hard data what Americans tend to know in their bones -- and demonstrate in their behavior.
Gasoline prices of 1980, after adjusting for inflation, were equivalent to $2.50 a gallon today. Some Chicago-area retailers are near that level, but the nation's average of $1.64 is well below it, and so is Minnesota's $1.79. Even in the 1960s, when a gallon was 30 cents, Americans were paying the equivalent of $1.75 today.
Twenty years ago, gasoline accounted for about 5 percent of the average household budget, according to the Cambridge group. Today the figure is about 3 percent -- even though household mileage goes up every year, even though fuel efficiency has been fairly flat for a decade.
In 1980, it cost about 17 cents per mile to fuel the average car. Today the figure is about 7 cents. At that rate, why should Americans reconsider their love affair with sport-utility vehicles, or worry about driving habits that have boosted the average driver's mileage by 34 percent in two decades?
The answers, of course, have little to do with the price of gasoline and everything to do with the social costs of car-dependent living -- starting with urban air pollution and global warming. After the oil shocks of the 1970s, it seemed that market factors might force a rethinking of U.S. motoring habits. But that appears a hopelessly naive notion this summer, as Americans confidently shrug off the temporary pain of today's high prices, believing they will soon recede.
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