My first job was pumping gas at my father’s gas station, back in 1970. The price per gallon fluctuated, but was usually around 34 cents. Gas stations competed for customers then, offering full service window-washing and offers to check the oil and tires. We also awarded Top Valu stamps and frequently gave out promotional gifts like glassware and steakknives, or had game pieces to attract repeat customers.
When the ’73 OPEC oil embargo came along the availability of gasoline dropped, the price shot up, and my dad happily trashed the Top Valu stamp machine. The new price of gas was shocking – as much as 42 or 44 cents per gallon (41.9 and 43.9 cents, actually), and consumers were very price sensitive. We once had our price at .41 and our driveway was crammed with cars while the driveway of the station across the street — at .43 — was as barren as the ANWR during the caribou’s non-breeding season. As I recall, I was also making less than $2 an hour back then.
Ah, the good old days, eh?
Not necessarily, even with gas pushing or exceeding $3 per gallon. A National Policy Analysis report by David Ridenour of the National Center for Public Policy Research has an interesting comparison between the price of gas and other commodities in April of 1981 and today. According to data he cites from the Bureau of Labor Statistics, the average cost of a gallon of regular unleaded gas (sans taxes) in ’81 was around $1.26, which would be $2.83 in inflation-adjusted dollars today. Yet the average cost per gallon of regular unleaded (pre-tax) in May of this year was $2.29, about 19% below the adjusted cost. Furthermore, he indicates that in the late 70s and early 80s the adjusted cost was regularly over $2 per gallon, while the .25 per gallon pre-tax cost of gasoline in 1922 is the equivalent of $3 today.
By comparison, the report shows that a half-gallon of milk in 1981 cost $1.12, and $2.09 in May of this year. Both milk and gasoline have increased at slower rates than inflation over this time, but milk prices have increased at a slightly greater rate than gasoline. I figure we don’t notice this so much because we rarely buy 20 gallons of milk a week. (But can you imagine a “Got Gas?” advertising campaign?)
Another popular commodity, bread, has also increased 103 percent in the past 25 years, which is about 8% below the rate of inflation. Meanwhile, the cost of postage-stamps offered by our government-run monopoly have just about matched inflation over the same period.
While it’s never fun to pay out the big bucks at the gas station, the impact on the family budget hasn’t been as extreme as it might appear. Furthermore, we can be very glad that our cars don’t run on bottled water, which on a gallon-to-gallon basis is nearly three times that of gasoline. As Ridenour notes:
If I’m not mistaken, water is the most abundant resource on the planet, it is not controlled by a cartel, its known reserves are not limited primarily to volatile areas of the world and it requires substantially less refinement than gasoline to bring to market.
Anyone interested in getting into the Big Water bidness with me?