As featured in The Wall Street Journal, Money Magazine, and more!

Inflation-Adjusted Gas Prices: Do They Really Matter?

by Flexo on September 13, 2006

in Uncategorized

Steve Hargreaves says Americans should quit griping about gas prices, but adjusted for inflation, a gallon of unleaded gasonline costs less than it did in the early 1980s.

Here’s another statistic the CNN Money article cites:

Moreover, in 1980, the average American had to work 105 minutes to buy enough gas to drive the average car 100 miles… By 2006, the average American needed to work only 52 minutes…

I have some issues with this. The “average American” salary, if we’re talking about the mean, is skewed upwards thanks to salary increases at the top which far outpaced the salary increases of most workers.

Nevertheless, this statistic is still irrelevant. The average commute time has grown since 1980, so even if the number of minutes worked to pay for 100 miles is lower, the number of minutes worked to pay for commutes is higher. Demand increases and prices go up, and demand has not declined as the gas prices increased.

VN:F [1.7.4_987]
Rating: 0.0/5 (0 votes cast)


Email this article Email this article Print this article Print this article
Share this article: Twitter | Tip'd | Facebook | Delicious | Reddit | Digg
About the Author

Flexo, the owner and creator of Consumerism Commentary, has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow him on Twitter.

If you enjoyed this article, get the free RSS feed or get daily emails.

Join the free Consumerism Commentary newsletter. Enter your email address here to receive weekly emails with behind-the-scenes information, exclusive giveaways, and money tips.



Related Entries on Consumerism Commentary

  • Interestingly enough. Minimum wage in 1980 was $3.10. Adjusting for inflation (3% annually), the minimum wage today should be $6.76 but it's still at $5.15 (federal level) so he's off on that mark too.
  • Median salary would be a much better indicator here. All those CEOs are messing up the average.
  • Matt
    Maybe you should do a google search on "Peak Oil" or "Hubbert's Peak".
  • What's your point about Peak Oil? I wasn't writing about reasons for the price increase of oil. I was writing about the statistics used to compare gas prices at the pump.
  • Teddy
    I don't see any reason to believe they're talking about the "mean", when the article clearly states the "average". They are distinct statistical entities.

    "Nevertheless, this statistic is still irrelevant. The average commute time has grown since 1980, so even if the number of minutes worked to pay for 100 miles is lower, the number of minutes worked to pay for commutes is higher. Demand increases and prices go up, and demand has not declined as the gas prices increased."

    If average commute time has risen, it is pertinent, but it does not make the stated facts irrelevant. Also, demand does not operate in a vacuum. Your statement disregards a factor known as "supply". You may have a good point to make (I'm unfamiliar with the details of the issue), but you're not making it effectively.
  • Mark
    Well, my commute time has sure gone up. A few years ago I was able to drive to work in 5 minutes. Now, after moving, it takes me 8 minutes to walk to work. But although the time has gone up by 60%, the gasoline required has gone way down.
blog comments powered by Disqus

Previous post: Savings Interest Rate Update: UFB Direct Up to 5.27%

Next post: Would You Travel Overseas for Cheap Surgery?