March 13, 2008

NOBODY SPENDS MORE ON ENERGY THAN THEIR GRANDFATHER DID:

Record gas prices push energy spending to near 1980s levels (Steve Hargreaves, 3/11/08, CNNMoney.com)

Adjusted for inflation, gasoline at $3.227 a gallon, according to AAA, is still about 18 cents below its peak of $3.405, set in March 1981, according to the Energy Information Administration. And Americans are spending about 6% of their total disposable income on energy, down from about 8% in 1982.

But prices are higher then they have been at any time in recent memory. In 2002, when many people may have bought a vehicle they are still driving today, Americans spent just 4% of their income on energy. Gas prices, adjusted into 2008 dollars, were at a near all-time low of around $1.30 a gallon.

"It really hasn't reached a level it did in 1982, but it's approaching it," said Kay Smith, an economist at EIA. "It's becoming a burden."

Moreover, Americans haven't spent this much of their income on energy since 1986.


The problem is it's still too cheap to drive down consumption, which we could have rectified with higher gas taxes.

Posted by Orrin Judd at March 13, 2008 10:25 AM
Comments

Bush's one big mistake, OJ. You've nailed it. He's taken the massive PR hit from the high prices without any attendant gains he could have made from driving it up even higher with taxes...

Posted by: Benny at March 13, 2008 11:23 AM

Ix-nay on the axes-tay!

A high gas tax would obliterate my business (standup comedy) as it currently exists. And, as it currently exists, it is paying my bills.

Find another solution.

Thank you.

Posted by: Brian McKim at March 13, 2008 11:48 AM

What % of disposable income for driving a horse-cart? What is the % for taking public transportation?

Posted by: ic at March 13, 2008 1:47 PM

Sorry, the US government is not to be trusted with higher gas taxes. See: Social Security trust fund. And Medicare.

Posted by: jim hamlen at March 13, 2008 5:35 PM

That's a counterexample. We undertax both.

Posted by: oj at March 13, 2008 5:59 PM

Why in the world would you want to discourage consumption when our way of life is based on economic growth?

Posted by: Perry at March 13, 2008 9:37 PM

Do you mean undertax (your mother will beat you for that one) or underfund (my 7 year-old son will beat you for that one)?

Posted by: jim hamlen at March 13, 2008 11:58 PM

undertaxed. They're funded.

Posted by: oj at March 14, 2008 6:37 AM

Ah, the fourth rail of American politics: taxing benefits like ordinary income. Good luck.

Posted by: jim hamlen at March 14, 2008 7:09 AM

Because investment drives economic growth too and is a function of saving that disposable income. The savers then need less government service later in life. It's how you break the statist cycle.

Posted by: oj at March 14, 2008 7:19 AM
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