[Vision2020] The Price of Gas

Jeff Harkins jeffh at moscow.com
Mon Apr 11 20:31:04 PDT 2005


I was thinking about the price of gas today (I had to fill up my gas cans 
for yard duty) and the sticker shock really hit - for a moment.  Hey, it 
was $12.50 to fill up a 5 gallon can.

Having been raised in Dallas, I recall that gas was selling for as low as 
.179 per gallon in the early 60's.  In 1964, I recall the price was about $ 
.199 per gallon.  Just for fun, let's calculate the price today, if the 
average inflation rate was about 6.5% per year.  I was surprised - if you 
invested $ .199 in a savings account in 1965 and held it there for 40 years 
(2005) - compounded at 6.5% annually, the amount you could withdraw would 
equal approximately $2.48.  Interesting huh?  Guess we have been getting a 
pretty good deal for the past 40 years.

S0 just how much will the gas price increase affect a person.  Assume that 
you drive about 12,000 miles a year.  Also assume that you drive a vehicle 
that gets about 15 miles per gallon. This means that you will use about 800 
gallons of gas.  The price is up about $1 since the first of the year.  If 
it remains at about $2.50 per gallon, it will cost you about $800 more per 
year. Under these assumptions, you will spend about $2,000 for gas for the 
next 12 months. Hmmm -   food for thought.


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