Here’s a quickie on the economy.
Gas prices of course hit a record high Wednesday but that’s not the real news. A little math and reading between the lines shows some very interesting numbers.
The price of gasoline rose to an all-time high Wednesday, according to the widely followed survey conducted for the motorist group AAA.
The average price of regular rose overnight to $3.246 a gallon, according to AAA’s Web site. That’s nearly 2 cents higher than the previous record of $3.227, which was first set last May and matched Tuesday.
Regular was $2.953 on average at this time last month and $2.543 a year ago.
Hawaii and California fetched the highest prices at the pump, as consumers had to shell out an average of $3.61 and $3.59 respectively for a gallon of gas. But New Jersey and Missouri drivers found gas prices to be nearly 60 cents a gallon cheaper, paying $3.02 and $3.04 respectively.
But here’s the part that caught my eye:
When adjusted for inflation, gas prices are still below their peak. The record on that basis was $3.405 and set in March 1981, according to the Energy Information Administration.
Now, I remember that inflation adjusted price being a lot lower than $3.40 a gallon. So I looked back. Lo and behold I find this from last year.
Gasoline prices have soared to levels never seen before as even the inflation-adjusted price for a gallon of unleaded topped the 1981 record spike in price that had stood for 26 years.
And higher prices could be on the way as Americans get ready to hit the road for the Memorial Day holiday and the start of the summer driving season.
The Lundberg Survey, a bi-weekly gas price tracking service, put the price of a gallon of unleaded at $3.18 in its latest reading released late Sunday, up more than 11 cents from its reading of two weeks ago.
While gasoline had already been in record territory in current dollars, Trilby Lundberg, publisher of the survey, said this is the first time that her survey topped her 1981 record high when adjusted for inflation.
The price of $1.35 in 1981 works out to $3.15 in current dollars, she said. The Iran-Iraq war, which started the year before, choked off oil supplies to the global market, causing that spike in prices.
The Energy Information Administration’s latest pump price, when adjusted for inflation, also reached a new peak. The EIA said Monday the average price for regular unleaded gasoline soared 11.5 cents over the past week to a fresh record of $3.22 a gallon, the all-time high fuel cost reached in March 1981.
By my calculations, that’s nearly 6% inflation for 1981 dollars in ten months from May 2007 to March 2008, or about 7% at a yearly rate, from just last year.
In other words, the government’s own inflation adjustment figures show we’re in 6-7% inflation right now with a rapidly shrinking economy, and all the other problems we have on top of the housing depression and the derivative time bomb.
Yeah, that just made my day too. Keep an eye on that Energy Information Administration maximum gas price figure “in inflation adjusted dollars” from 1981 that seems to get included in any gas price story over the next several weeks.
I bet that number goes up from $3.405 when the inevitable Memorial Day weekend gas gouging story comes around.
