Stream of consciousness blog post, with a little math:
I'd assume you've noticed that gas prices are scraping around $4/gallon again in the Twin Cities. That's a problem and even when you factor inflation into the mix, it's very expensive right now.
As it happens, I'm enjoying one of my favorite indulgences this morning, which is listening to "Saturday Morning Flashback" streaming from WXRT in Chicago. They are featuring the year 1975 and they happen to playing "Ooh Las Vegas" by Emmylou Harris as I write.
Host Wendy Rice just mentioned in passing that the average price for a gallon of gas in Chicago in 1975 was $0.58/gallon. In 2012 dollars, that would be $2.48. You can verify the calculation here. As I write, the average price of gas in Chicago is $4.32. That means, in constant dollars, the price of gas is 74% higher than it was in 1975.
In 2008 the price of gas was a big story. I was in Chicago in August, 2008 and paid about $4.20 for a gallon of gas. Comparing that price to the 1975 price, gas should have been the equivalent of $2.32 in constant dollars. That meant, in constant dollars, that the price of gas was 81% higher in 2008 than 1975. Of course in August, 2008, the price was falling, eventually heading to a price around $2/gallon by the end of the year. It's been rising steadily lately. And I don't suppose that the current adventures in the Middle East are going to help the prices go down much.
So why aren't we talking about the price of gas now? I'll take your guesses in the comment section.
Oh, and by the way, now that Ben Bernanke is launching the latest round of quantitative easing, that $4 price you're paying now is more likely to be a floor than a ceiling. But that's another post.