NCPA - National Center for Policy Analysis


June 4, 2004

The price of gasoline has actually declined over several decades, says Pete du Pont, chairman of the National Center for Policy Analysis, and more needs to be done to ensure it remains a source of cheap and reliable energy.

Contrary to current media reports, there are two reasons why gas is actually cheaper now than it was in the 1970s:

  • Vehicles average about 22 miles per gallon of gas, compared to only 13.5 miles per gallon in the early 1970s, so the price per mile driven has declined.
  • Family median income is $63,000 today (adjusted for inflation) compared to $46,000 in the 1970s, so gasoline consumption costs a smaller proportion of the family income.

Additionally, gasoline burns cleaner than it did 20 years ago. The Environmental Protection Agency (EPA) reports that lead emissions are almost nonexistent, carbon monoxide has declined 62 percent, sulfur dioxide 52 percent, nitrogen dioxide 24 percent and ground-level ozone 18 percent.

Despite the good news about gasoline, says du Pont, the United States is not building enough refineries to keep up with the demand from a growing population:

  • The last refinery in the United States was built in 1976, and there are no plans to build more -- yet the Department of Energy predicts gasoline demand to increase by about 3 percent per year.
  • The number of refineries producing gasoline has declined from 301 in 1982 to 153, leaving the United States with a shortfall of about 800,000 barrels per day.
  • Regulatory burdens, such as emission control standards for refineries and formulation requirements for gasoline, have hindered the construction of new refineries and created a greater dependence on imported gasoline.
The world is not running out of oil, says du Pont -- in fact, reserves are actually increasing. What is needed, however, is more capacity to refine oil without politics getting in the way.

Source: Pete du Pont, "Pump Power,", May 24, 2004.

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