Whether we like it or not, gas prices are increasing every day and it is affecting everyone.
It does not matter where you live, all of our wallets are being hit hard at the pump.
According to AAA, the national average cost per gallon as recorded on March 13 was $4.325. A few days earlier on Friday, March 11, the United States reached the highest recorded average price for regular unleaded and diesel maxing at $4.439 and $5.448 respectively.
For the average American, these numbers appear to be high, maybe even historic. However, we need to ask ourselves, “Are these numbers really historic?”
On the surface, yes, but if you dig deeper they really aren’t.
Before this week, the national average was $4.10 as recorded in 2008. The decade-long record has since then been broken again and again.
America may have broken the record, but if you consider other factors, we’re still paying less than years prior. According to a CNN Article titled “Biden’s approval rating rises following Russian invasion of Ukraine”released on March 13, there are two factors that still need to be considered before calling these numbers “historic:” inflation and fuel efficiency.
To understand how inflation fits into the equation, we can look at the latest research of Justin Wolfers, a professor of economics and public policy at the University of Michigan.
Unlike other data, Wolfers’ research utilized information from the U.S. Energy Information Administration and the U.S. Bureau of Labor Statistics to calculate how much a gallon of gas costs per average hourly earnings.
According to Wolfers’ data posted on FRED (Federal Reserve Economic Data), the price of gas peaked at 13.5 minutes in 2008.
Even though gas prices are higher now than 2008, when inflation is factored into the equation, they’re still cheaper. In fact, based on Wolfers’ data, it still takes the average American less than 10 minutes of work to buy a gallon of gas.
In addition to factoring in inflation, we should also consider the increased efficiency of fuel. According to the Bureau of Transportation statistics, fuel efficiency in cars has increased over time. For the average U.S. light duty vehicle, it’s increased from 21.8 MPG in 2008 to 22.9 MPG in 2020. It is not a significant increase, but it’s still something.
What does this data mean?
Gas prices may not be historic, but if they continue to increase they may eventually get there.
In the end, it doesn’t matter if they are historic or not, I think we can all agree on one thing—we do not like them.