February 15, 2018

PITY THE POOR MALTHUSIANS:

I Win My Long-Run Gas Price Bet (Bryan Caplan, 2/15/18, EconLog)

In July of 2008, the average U.S. price of regular gasoline was $4.062.  As usual, global hysteria followed.  And as usual, I was unperturbed.  So unperturbed, in fact, that I made the following bet with Tyler Cowen and David Balan:
I will bet $100, even odds, that the U.S. price of gas (including taxes) in the first week of January, 2018 will be $3.00 or less in 2008 dollars.

A subsequent clarification specified that the bet was on the price of regular gasoline.

Today, the January CPI arrived, allowing us to finally resolve this ten-year bet.  In 2008, the US CPI stood at 215.3.  In the third quarter of 2017, it hit 244.7.  Since then, there has been further inflation of 0.3%, bringing us to 245.3, for a grand total of 13.9% inflation during this period.  For me to win, then, the average price of regular gasoline in January 2017 must be less than $3.417.

So where are we now?  In January of 2018, the average price was a mere $2.555.  I have therefore won this bet by a margin of over 25%.

Posted by at February 15, 2018 5:38 PM

  

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