Gas Prices

This post originally appeared on Orphan Road.

This article has some interesting points to make about fuel consumption:

Americans spend 3.7 percent of their disposable income on transportation fuels. At its lowest point, that share was 1.9 percent in 1998, and at its highest, it reached 4.5 percent in 1981, said Johnson of Global Insight.

Still, despite the rise in energy prices, gasoline remains cheaper in the United States than in most industrialized countries. In France, for example, a gallon of gasoline costs about $7.70 at today’s exchange rates. Also, Americans pay less to drive a mile today than they did in 1980, once the impact of inflation and gains in fuel efficiency are taken into account, said Lee Schipper, a visiting scholar at the transportation center of the University of California, Berkeley.

Schipper estimates that the cost of gasoline per mile traveled will be about 15 cents this year. That is nearly three times the low of 5.6 cents a mile reached in 1998, when fuel efficiency peaked and prices were at their lowest. But it is still cheaper than the record paid in 1980 of 17.1 cents a mile, adjusted for inflation.

As bad as gas prices seem, they’re still not as high as they’ve been by historical standards. But people’s perception in this case matters at least as much as reality, and the perception is that gas prices are pretty darn high. Finally, it’s hard to separate the increase in gas prices from the general slow down of the economy in general.

All that said, it certainly does seem like the fundamentals of supply and demand, not reckless speculation, are leading us inexorably towards $200/barrel.