NCPA - National Center for Policy Analysis

PUTTING GAS PRICES IN PERSPECTIVE

June 2, 2004

Last week, crude oil hit an all-time high of almost $42 a barrel, and gas tops $2 a gallon across the nation. But Americans still pay far less for gas than other countries, and the share of our income that goes toward gasoline is much lower than in the 1970s and early '80s say economists.

  • While Americans paid an average of $1.78 per gallon of unleaded gas in April 2004, a gallon of gas cost $4.77 in France, $5.00 in Germany, $5.25 in Denmark, and $5.40 in the United Kingdom.
  • In March of 1981, when oil prices spiked during the Iran-Iraq war, Americans paid almost $3 for a gallon of gas, in inflation-adjusted terms.
  • Gas costs currently account for about 2.7 percent of consumer spending, compared with 3.87 percent in 1974, 4.8 percent in early 1982, and 5.14 percent in mid-1980.

"Americans" personal incomes have risen eight-fold since 1973, twice as fast as gasoline prices,-- said Rebecca Cook, an equity analyst at Voyageur Asset Management in Chicago. Another reason that we spend a relatively small share of our income on gasoline is that fuel efficiency has increased dramatically since the 1970s.

Source: Sudeep Reddy, "Pain at the Pump," Dallas Morning News, May 30, 2004.

 

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