Left-handed Complement

MUDGE’s Musings

…   Actually, it never left.

That’s right, faithful reader, that $3.899/gallon gasoline is still amazingly cheap.

That’s what yr (justifiably) humble svt paid yesterday to put 15 gallons of ExxonMobil’s 87 octane best into his mid-size sedan’s tank. Do the math. A Sunday paper less than $60.

Amazingly cheap, right?

Apparently so.

I’ve seen this argument before; that compared with much of the rest of the world (except places like Mexico and Venezuela, where domestic prices are kept artificially low for political reasons), U.S. residents pay proportionately less to fuel their minivans and SUVs than most.

Gasoline Is Cheap

Four dollars a gallon is outrageous! We should be paying much more.

By Robert Bryce | Posted Thursday, May 15, 2008, at 3:24 PM ET

The next time you have to take out a loan just to fill up your tank, remember this: Four-dollar-per-gallon gasoline is cheap.

There’s no doubt that high fuel prices are hurting low-income consumers, and high energy costs are placing a tax on the economy that is slowing investment while sending billions of dollars overseas. It’s unsurprising that presidential candidates and members of Congress issue new proposals practically every day to lower gas prices: Stop filling the Strategic Petroleum Reserve! Suspend the federal gas tax! Open ANWR to oil drilling!

These proposals are delusions, and Americans are living in a fantasy land when it comes to energy and energy prices. Over the past few years, consumers have been inundated with news stories about the soaring price of gasoline. Invariably, these stories include comments from a motorist who is outraged at the evils of a) Saudi Arabia, b) OPEC, c) Big Oil, d) all of the above.

It’s not outrage I’m feeling. More like bemusement.

[Please click the link below for the complete article — but then please come on back!]

Four-dollar-per-gallon gas is cheap! – By Robert Bryce – Slate Magazine

During the formative years of the international automobile business, fuel was dirt cheap in the U.S.; more dear in Europe. Relatively high fuel prices, together with the antiquity of many European central cities with their narrow winding streets, combined to influence the manufacturers in Europe to design smaller, fuel-miserly vehicles.

Such automotive icons as the original VW Bug and Austin/Morris Mini were responses to domestic conditions in Germany and Great Britain respectively. Diesel powered vehicles were developed yielding better kilometers per liter, somewhat less convenient (noisy and even dirtier emissions), but diesel fuel was less refined and thus less expensive.

Meanwhile, in the U.S., Ford, Chrysler and especially General Motors were building larger and larger highway cruisers, with inefficient, dirty V8 engines (probably three or more times larger displacement than the Bug or Mini of the 50s and 60s), because there were wide open spaces to explore, and gasoline was $0.29 / gallon.

And imported VWs and Minis in those years were counter-cultural objects of derision/affection, depending upon one’s age when first encountering them, and most people in the U.S. found those wide open spaces inappropriate for their diminutive size and weight. Today’s Bug and Mini replicars are nostalgia magnets, and are far more conventional in size and weight than the originals.

Well, the wide open spaces are still out there, beyond the suburbs and exurbs that the big cars and cheap gasoline helped colonize, but now gasoline is almost $4/gallon, and we haven’t seen the ceiling. And, the general state of the economy, or the average person’s current perception of it, would indicate an emptier and more wide open space this summer.

However, let’s put 29¢/gallon into perspective. The dollar is worth a whole lot less today than in 1965, so that 29¢ then would be $1.92 today (okay, the end of 2007, according to this useful website). But it felt cheap, and even $4 probably still should also. After all, it’s only double the price of 42 years ago. What other commodity has only doubled in price or value over that span?

So, even $4 is still relatively cheap.

And, Sen. McCain, Sen. Clinton, a fuel tax holiday is still a terribly wrong-headed concept.

The obvious way to sever our dependence on foreign petroleum is to create a federal tax to bring the price up to $6 or $8 or even $10/gallon. Use that windfall to start repairing those crumbling bridges and paying down our $zillion war debts.

Our cars would definitely get smaller in a hurry, even recalcitrant Ford, Chrysler and General Motors would find the trend irresistible and compelling. And our children and grandchildren might have a future less burdened by rusting infrastructure and crushing national debt.

It’s it for now. Thanks,

–MUDGE

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This entry was posted on Thursday, May 15th, 2008 at 8:30 pm and is filed under Economy, History, History of Technology, Politics, Presidential election, Recession. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.