Gas prices, since they’re one of the most universal and visible costs of day-to-day life, are always of great concern to Americans. We live in a big, wide-open country and driving isn’t just a luxury. It’s a part of life for most of the country. Especially in places like North Dakota.
Of late, thanks to lower oil prices, gas prices have been falling. But due to things like inflation it’s hard to compare the prices of one era to another. Professor Mark Perry, though, has a graph which tracks the cost of fuel as the number of minutes the average American earning the nation’s average age must work to drive 100 miles.
This metric takes into account everything from price inflation to vehicle efficiency to changing income levels. The results are pretty amazing. The cost of fuel prices are near record all-time lows:
“If gas prices fall another 26 cents per gallon from $2.36 currently to $2.10 per gallon, gas prices adjusted for fuel economy and wages would be the cheapest in US history,” wrote Perry on December 23rd. “In some states like Oklahoma ($2.03), Missouri ($2.04), Kansas ($2.11), Texas ($2.13) and Indiana ($2.14), gas prices are already below or near that level.”
On a related note, take a look at this five-year trend line from GasBuddy comparing oil prices to the U.S. average gasoline price.
People who get upset about gas prices often accuse the oil and refining industries of manipulating the market. It’s not a matter of supply and demand and oil prices, they tell us. It’s “greedy” big oil playing games. These conspiracy theories exist so persistently that Congress frequently orders investigations into gasoline prices which inevitably find nothing.
It’s pretty clear that gasoline prices are closely tied to the price of crude oil. When one goes down, the other goes down.