Cost of gasoline has gone a long way
Adjusted for inflation, it’s at lowest since ’57
Call it the “Whopper Index.”
During Whopper Wednesdays at the Burger King on Argonne Road, customers can get a burger for $1.69.
But the real bargain is at the Holiday station across the street, where gasoline now costs less than a Whopper – any day of the week.
In fact, sitting at $1.49 a gallon for a couple of weeks – a price that can be beat at some stations in Spokane and all over Coeur d’Alene – gas is cheaper than a lot of things: lattes, milk, bread, fishing worms, Sunday newspapers, a Senate seat in Illinois, a new stadium for the Huskies.
This scenario, it turns out, was months in the making. It may be helpful to review what was happening in July.
To set the stage: Sen. Phil Gramm was dismissing economic concerns as a mere “mental recession,” and no one was using the word “bailout” in the same sentence with “General Motors.” The economy was just beginning to eclipse the Iraq war as a campaign issue.
And about the time people were deciding where to spend July Fourth, gasoline topped $4 a gallon (it would eventually hit a national average of $4.11). Sens. John McCain and Hillary Rodham Clinton agreed that it was time for a “holiday” from the federal gas tax so Americans could spend that 18.4 cents on other necessities.
Five months later, we know the recession is more than a state of mind. Unemployment has soared. People are trying to remember what their grandparents said about surviving the Great Depression. State governments face layoffs, tuition increases and reductions in services.
But lose those long faces, because gas is down to a national average of $1.56 a gallon. That’s the lowest price since February 2004, according to the federal Energy Information Administration, whose graph charting gas prices is shaped a lot like the Matterhorn. Based on data going back to 1990, prices have never fallen so rapidly.
Adjusted for inflation, gas is cheaper than it was in 1957, when it sold for 30 cents at the pump (the equivalent of $2.27 today). Then, as now, it was cheaper than a Whopper, which was introduced that year at 37 cents.
In 1957, a motorist could buy 3.33 gallons of gasoline for the federal minimum wage of $1. Today, a minimum-wage worker could buy 4.2 gallons on an hour’s salary.
Of course, such bargains don’t mean much if you don’t get a paycheck, like the 6.7 percent of Americans who are out of work. That’s more than twice the unemployment rate of 1957.
“I couldn’t go on vacation last summer because of the high cost of gas,” said Jerry Whitehead, 64, who was at the Holiday recently, filling up his Ford Ranger. “Now that it’s low, jobs are going away and you’re afraid to leave.”
The question is how long the gas-station limbo will last. The CEO of Gulf Oil told reporters this month that he wouldn’t be surprised to see gas under a buck early next year. If that happens, it will be the first time since the Clinton administration (March 1999, to be precise).
But it’s probably wise to remember what the “experts” were saying in July. Whitehead hasn’t forgotten.
“They were saying we’d be paying $7, $8 by now,” he recalled.
One thing’s clear from looking at the Energy Information Administration Web site: Gas won’t stay low. Sometimes it takes a few years, but since at least 1990, whenever the cost of filling up has gone down, it’s always climbed to a new record high.
Kind of like when Burger King dropped the price of a Whopper to 99 cents in 2003. Pretty soon it was back to $2.39, except on Whopper Wednesdays.