ENOUGH ABOUT GAS PRICES!

It’s as if the news media is clueless when it comes to economics. A CNN story (and I’m sure there will be plenty of similar ones) says:

ATLANTA (CNN) - The average price of a gallon of self-serve, regular gasoline shot up nearly 13 cents over the past two weeks, to a record $2.10, a national survey said Sunday.

That’s just not true. There’s this thing called inflation, and this other thing called the Consumer Price Index. A buck today isn’t the same as a buck in 1974. People earn more. Dollars are worth less.

A 60-cent gallon of gas in 1974 is equivalent to $2.38 in 2005 dollars.

In other words, $2.10 a gallon is higher than it has been lately, but not even close to a record high.

So CNN and friends should quit the fear-mongering bullshit and start giving people accurate information: We’ve enjoyed some of the lowest gas prices in history lately (yes, lowest), and now that’s ending.

This isn’t a good thing, but it’s a lot different than ‘the highest gas prices ever.’

Here’s a chart from the National Association of Railroad Passengers — inflation-adjusted gas prices are indicated by the red line:

(Click to enlarge.)

So for the highest gas prices in modern times, look at 1980-1982. That’s when it was expensive. Furthermore, today’s cars get much better mileage, so driving is even less expensive. (Except for SUVs, but if you’re driving one of them who cares what you think of gas prices?)

Finally, a good resource to see what a buck is/was worth comes from the Federal Reserve Bank of Minneapolis: http://minneapolisfed.org/research/data/us/calc.