[Vision2020] The Price of Gas
Jeff Harkins
jeffh at moscow.com
Tue Apr 12 07:00:36 PDT 2005
Well actually Donovan, you assumed that all costs of products using oil
rose. I never made that assumption or statement. I don't accept your
statement that everything is made of plastic. It is probably purchased
with plastic .........
Also I never stated that the prices of all goods and services rose. I
think that you made that assertion in your earlier post. Also, I did not
state that the inflation rate was 6.5%, I inferred that if the rate was
approx. 6.5% over the 40 year period, then the real price of oil has not
gone up. But if we can agree on the index that we will use to define
inflation, we can continue the dialogue. What about the CPI or the WPI?
"1964 a bad year for gas" Heartburn maybe, but gas - we were awash with
oil. Well, again I was musing about 1965 and the price of gas. I do
remember several of us teenagers complaining that gas had gone up a couple
of pennies over the past year. But a "bad year for gas"? No, I don't
think so.
We will just have to agree to disagree on whether we can compare living
standards in 1965 with 2005. Many of the measures will be soft, but social
scientists use them all the time. Let see, you are a social scientist
aren't you (political science undergrad and education grad student)? But
there will be hard stats as well. Gee, during the 1960's folks drove cars,
lived in houses, had indoor plumbing, there was television and radio,
stereo was hot as were betamax and 8-track. Heck, we even had our own
version of the Iraq war.
Folks back then complained about government, about low wages, about high
taxes, about the lack of social programs - almost like today, they
complained about most everything.
And even old folks like me can remember back 40 years and there are alot of
us around. Maybe we could start by asking them to compare then and
now. My hunch is that most of us would agree that the music was better!
Aww - shucks. Well let's agree on a price level index and we will go from
there.
Perhaps At 12:10 AM 4/12/2005, you wrote:
>Mr. Harkins,
>
>You write,
>
>"But Donovan, surely you realize that if the price of oil hasn't really
>increased in real dollars for about 40 years, that the products that use
>oil will adjust by that fractional increase."
>
>That comment is full of assumptions. First, not everything used oil in the
>60's ike it does now. Everything is made out of plastic now. Second, we
>have more things, more materials. Third, you assume that all costs rise
>for everything. This is not true, the cost of many goods have decreased.
>Next, you assume that your calculation of oil and inflation is correct.
>Not all things rise in value and cost equally at 6.5% per year. Finally,
>you assume the year that you picked, 1964, was a good representative year
>of the 1960's. 1964 might have been a bad year for gas.
>
>I do not think you can compare living standards of 1960 to 2005. There is
>too much difference. Rent and medical costs are more, and wages are lower.
>You also need different stuff to live. You cannot compare the times and
>changes on those levels. It is just not comparable. It is totally
>different worlds.
>
>But yes, I am always game on taking about the economy.
>
>Take Care,
>
>Donovan J Arnold
>
>>From: Jeff Harkins <jeffh at moscow.com>
>>To: vision2020 at moscow.com
>>Subject: RE: [Vision2020] The Price of Gas
>>Date: Mon, 11 Apr 2005 22:26:18 -0700
>>
>>Donovan
>>
>>It's a good thing that so many of the uses of oil are recyclable - like
>>plastic and lubricants.
>>
>>It is also good that the price of oil is encouraging the refining of sour
>>crude for gasoline products. As I recall, only about 7% of oil produced
>>is sweet. But Donovan, surely you realize that if the price of oil
>>hasn't really increased in real dollars for about 40 years, that the
>>products that use oil will adjust by that fractional increase.
>>
>>In any case, I was musing about the cost of gasoline for my lawn
>>mower. If you would like to discuss product costing and the forces that
>>drive the marginal revenue product to the marginal cost, I'm game.
>>
>>At 09:59 PM 4/11/2005, you wrote:
>>
>>>Mr. Harkins,
>>>
>>>Yes, the gas price at the pump is a problem. But it is not the costs of
>>>mileage that hurts us the most. It is that costs go up for everything
>>>when oil goes up. Think about how a product is made and gets to you and
>>>how much oil it uses.
>>>
>>>The product might be made out of oil, like plastic
>>>The product in made in a plant that uses oil for lighting and energy to
>>>run the plant
>>>It is wrapped in plastic made out of oil
>>>It is shipped on a boat to the US that uses oil to get here
>>>It is then loaded on a truck that uses oil to get the store
>>>The store then uses oil to light the building
>>>You then use oil to go to the store to buy the product
>>>THe workers use oil to get to work and live
>>>The computers that manage the product use oil
>>>
>>>All these steps use oil and the cost of making and the costs are pasted
>>>on to the buyer.
>>>
>>>It is these factors that drive prices up on everything. The $15 at the
>>>pump per month is not the major problem for the majority of people. It
>>>is the cost of everything going up at once that is the problem. What is
>>>worse is that right now there are no clear and affordable alternative to
>>>oil. Our technology in this area has been suppressed largely in part by
>>>oil production companies.
>>>
>>>Take Care,
>>>
>>>Donovan J Arnold
>>>
>>>
>>>>From: Jeff Harkins <jeffh at moscow.com>
>>>>To: vision2020 at moscow.com
>>>>Subject: [Vision2020] The Price of Gas
>>>>Date: Mon, 11 Apr 2005 20:31:04 -0700
>>>>
>>>>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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>>>>
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