You’ve heard it, you probably said it, “Gas prices are outrageous!”
But are they really? Is $3.19 a gallon really that much? Is “big oil” ripping us off? Or have we just been distracted? Or, when it comes to economic realities, have we lost perspective?
The other day I heard a radio commentator belittling some politician, or economist, who said, in inflation adjusted terms, gasoline is actually cheaper than it was a generation ago. Like the average person is really going to buy the idea that gas is “cheaper.” The idea sent me on a nostalgic trip down memory lane; back to when I graduated college and was very cost/income conscious.
The year was 1968, I had received a degree in Education from New York University; tuition was $3000 a year - paid for by my dad. Both a slice of pizza and a subway ride were fifteen cents, a strret vender hotdog was twenty cents, and teachers had just gone on strike to earn a staring pay of $6,750 a year.
My Brooklyn Height, harbor view, apartment along with telephone and utilities was an outrageous $150 a month. Rent on that same apartment today? If you can find a vacancy, it will cost over two thousand a month plus utilities.
For graduation, my dad gave me a brand new Ford Cortina GT – it cost $2,000, a BMW cost $3,000. Both the Ford and BMW delivered 35 mpg at any cruising speed between 35 mph and 80 mph.
That two to three thousand dollar is now $25,000 to $60,000. That 35 mpg? If you can get 30 mpg you would be lucky; but, even though speed limits have gone from 65 to 55, top speed is vastly increased.
North and South Vietnam were fighting for unified control of their nation, there was talk of a “Domino Effect” and we were escalating our involvement. Back then, we were drafting kids fresh out of high school; and PTSD was still being referred to a either combat fatigue, or malingering.
We are no longer in Vietnam, and we no longer have the Draft; instead we are in Iraq, standing between Sunni, Shia and Kurd -- and “mobilizing” the National Guard. Where what we know as PTSD was rare among those in Nam, it now affects one in four of those who serve in Iraq. Soldiers disabled in Nam were not welcomed home, but they could expect disability pay and good medical or psychiatric care; those returning from Iraq are greeted at the airport gates, seriously wounded are declared ten percent disabled, denied disability benefits and if they suffer PTSD, they are demoted and discharged. Times have changed.
Oh! As for the cost of gasoline? Back in 1968 you could buy three gallons for a dollar. Today, you get three and a third gallons for ten dollars.
Funny thing that! Rents have gone up more than ten fold, the price of a slice of pizza, or a subway ride, has also increased over ten fold, as has the cost of that top of the line new car. Yet, to hold to a comparable inflation adjustment, the price of gas would need to push $4.00 a gallon. Why does it seem expensive?
Maybe if we looked at that teacher pay.
In 1968, a teacher’s pay check for two years more than covered the cost of the entry level credentials. For the average person, a week’s pay covered rent. Back then, a blue collar worker could make $5 an hour; two hundred dollars a week; ten thousand a year. Average wage today is under $45,000 - not over $100,000 - and when did you hear of teachers coming out of college to receive $67,500 or more?
Want to complain? Complain about “out sourcing”, or why it took eleven years to raise minimum wage to sixty percent of the inflation adjusted 1968 wage minimums. If you must, complain about wages falling so far behind inflation adjusted costs that the people must work harder only to have less then their industrialized nation counterparts.
When it comes to gasoline, and most domestic energy costs, when compared to what the rest of the world pays, actually, our costs are artificially low. But our wages, our real buying power, is even lower.
Our gasoline prices, are only a fraction of what other nations pay; and, until they hit five dollars a gallon, will remain less that the inflation adjusted 1968 prices. However, a prediction, another year in Iraq will, almost certainly, ensure gas prices exceed inflation adjusted 1973 oil embargo rates; or something in excess of seven dollars a gallon.