A musing on gas prices…

First of all, let me start out by stating the following: I don’t own a car. I don’t drive. I don’t even have a driver’s license. I meet all of the legal (and most of the financial) qualifiers to do all of these things, but I don’t. The reasons for this are varied and numerous, and I shall not get into them. The price of gas, however, still matters to me. It should matter to everyone, really, as it affects more than just the wallets of those poor, ignorant souls who regularly drive their land-yachts with no other passengers for no other reason than to probably compensate for something that I’d prefer not to speculate about. Anyway, as I was saying, the price of gasoline affects us all — from the effect it has on the prices of goods that must be transported, to the changes in flexible fuel taxes that respond to significant changes in the base price.

Before I get too off-track from the original intent of this post, let me tell you a funny story.

Several years ago, never mind how many exactly, I was taking a summer driver’s education course (for the benefit of my parents’ insurance premiums) in which we watched a number of instructional videos. Several of these were quite old and were shown on a reel-to-reel projector (something, might I add, I had not experienced in use in a classroom in nearly a decade at that point). One had a copyright date of, I believe, 1963. It’s this particular film that comes to mind every time I experience sticker shock when passing by a gas station. The average price of gas when I was taking that driver’s ed class was about $1.70 per gallon — cheap by today’s standards, but at that point it was the highest average price (not adjusted for inflation) that the U.S. had ever seen. (An astute reader could probably, at this point, use this information to discern exactly when I took this class.) The instructional film was shot from the perspective of a man driving his car through a city while he narrated his actions, referencing various rules of driving. During the course of this film, he passed by a gas station with a posted fuel price of 23 cents per gallon. At that point, I could hear a wave of whispers and murmurs throughout the room as my classmates noticed this with a certain level of incredulity. After the film ended, the instructor asked the class what things people had noticed about the film. The first response he got: “The price of gas!” The second: “He changed lanes in an intersection.”

I got to thinking about all of this again when, this morning, one of my professors related a story about how the first time he ever filled up the tank of his first car, it was in the midst of a gas price war, and he paid 19 cents per gallon. Even adjusted for inflation (making the assumption that 19 cents has about 1/5 the buying power now as it did in the mid-1960s), that’s 95 cents per gallon. I haven’t seen prices that low since late fall of 2001 when gas prices dropped sharply after 9/11. I remember a friend calling me from a gas station after she’d gotten gas in preparation for a short road trip we were making to an out-of-town football game, excited that she had filled the tank of her Ford Escort for less than $10. Those were the days — last time I checked, the gas station down the street from me has regular unleaded for $3.15 per gallon. *sigh*

Rising gas prices aren’t all bad, though. For one, it encourages more R&D in alternative fuels. For another, it means more tax revenue that goes to road improvement. (Few things feel nicer than the ride of a car over freshly laid asphalt.) Of course, the combination of the two can often spell trouble for DIY biofuel users. “We’re not here to hurt the small guy, we’re just trying to make sure that the playing field is level,” my fat, white ass. (Just to clarify, I’m not fat, just my ass is. All of me is pretty white, though. Nerdy, too. Big ups to Weird Al.) Seriously, though, despite the bureaucratic asshattery, rising gas prices, regardless of how much I may lament them, may actually work toward our benefit in the long run. One of these days, prices will hit the point where demand for gasoline shows some actual elasticity and people will finally start driving less. Maybe the U.S. will finally catch up with the rest of the industrialized world in the public transit infrastructure department. Maybe, maybe, maybe…

Or maybe I’m too optimistic. The realist (which many misidentify as the pessimist) in me is presently smacking me upside the brain and telling me to STFU about how high gas prices are so good for us. “If they’re so good for us,” it says, “why are oil companies netting record profits every quarter, as they tell us there’s a shortage or diminished refining capacity or instability in an OPEC nation or whatever the grand excuse of the month is for raising prices to compensate for losses?” Hmm. Good question. The economist in me wants to say that it has something to do with the inelasticity of demand for gasoline, but the economist in me wants to say a lot of things that it doesn’t get to, because some other part of me invariably has it bound, gagged and locked in a closet somewhere.