Itís Still About a Buck a Gallon
I was researching
some Now vs. Then costs for a story I did recently on car prices
when I stumbled onto something interesting and revealing.
And so, worth
Find an inflation
calculator; for example the federal governments Bureau of
Labor statistics CPI (Consumer Price Index) calculator (click here)
. Select 1980 as your starting year. Enter $1.25 about what
a gallon of gas cost in 1980. Select 2011 the most recent
year the calculator allows. Click calculate and prepare
for a surprise one that will also provide a heretical insight
into the nature of our economy as well as debunk a politically correct
piece of conventional wisdom.
save you the trouble. The amount that comes up is $3.43
which is what the BLS calculator says is the buying power of $1.25
in 1980 money today.
What does it
First, it means
that gas prices today, in real terms, are about the same
as they were in 1980. You may be paying more in terms of the number
of dollars, but youre really paying the same in terms of the
value of your money.
The only thing
thats really happened is you need more paper dollars to buy
the same thing. The value is the same, but the money is worth
less. The increase in gas prices is a mirage, a fiction. The commodity
itself has not increased much in actual cost despite the passage
of 32 years, despite the much-ballyhooed uptick in global demand
and in spite of the alleged and endlessly imminent bogeyman of peak
And so we come
to the awakening.
If the world
was really running out of oil or within sight of running
out the actual cost of the end product, gasoline, would be
going up in real terms. Dramatically so. Its an economic axiom
that limited supply (scarcity) plus rising demand equals ever-rising
costs. So how come the real price of gas is about the same now as
it was 32 years ago? The reason should be obvious:
plenty of oil.
not merely to meet current demand, but foreseeable future demand.
weve been scammed.
scare-mongering about peak oil and robbed (and
deceived) by inflation into accepting that its so.
The price of oil goes up because the amount of money being printed
If this werent
true, if we really are on the cusp of peak oil, not
only would the real price of oil be much higher than it is
(and rising precipitously, consistently) wed be seeing
cheap-oil-dependent industries adjusting their business models accordingly.
one example: The airline industry. It depends on affordable oil.
Without it, air travel becomes a means of travel open only to the
rich who dont fly coach or even commercial.
Yet Airbus has invested a kings ransom in fleets of A380s
double-decker wide-body jets designed to haul 525 people,
more than a Boeing 747. These huge airplanes burn oceans of fuel
oceans of fuel that must be available at an economically
reasonable cost for the forseeable future in order to fill
the seats with passengers, most of whom are just ordinary folks
who do fly coach and who cannot afford a first-class ticket, let
alone a private jet.
people making the decisions at Airbus. Do you suppose they are imbeciles?
That they dont know about peak oil or are
just ignoring the truth about the imminence of The End
of Oil? Or do you suppose its more plausible that they know
there is plenty of oil now and for the foreseeable future
and are making business decisions accordingly?
more sense? Which comports more with the fact that oil prices have
been stable for decades (a few short-term blips notwithstanding)?
the false-flag peak oil story and worries about
imminent scarcity that seems to never actually arrive are
used to justify ever-more-onerous government regulations in the
name of conserving that which weve got plenty of.
from fuel economy standards for cars that make them more expensive
to laws pushing us to buy CFL lights that are (you guessed it) more
expensive than wasteful (but much more affordable) incandescent
And, of course,
because there are people who are wise to the scam who understand
what inflation is and have figured out that market price signals
indicate, if anything, more oil on tap than less (i.e., increasing
worldwide demand has obviously been met with increased supply
and then some) theres got to be a back-up excuse:
trump card tossed on the table when the real facts about oil and
inflation and not just the price of oil, but the fact that
burning oil (as in cars) has become innocuous begin to spread
too far beyond the fringe.
the devastating fact with regard to the latter: More than 97 percent
of a 2012 model year cars exhaust stream is water vapor and
carbon dioxide compounds that have no negative effect on
air quality but which according to the global warming crowd
constitute greenhouse gasses that are dangerously
warming the planet.
So, even though
there is plenty of oil, and likely will be plenty of oil for years
to come, we mustnt use it (or must use less of it) in order
to limit greenhouse gasses.
From one con
(peak oil) to the next (Anthropogenic global warming).
Pull back the
curtain on the first one and the second curtains ready to
take its place.
And that, folks,
is how the circus runs
with permission from EricPetersAutos.com.
[send him mail] is an automotive
columnist and author of Automotive
Atrocities and Road Hogs (2011). Visit his
© 2012 Eric Peters
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