Think $2.90 for Gasoline Is High? Try $5.17
By: Administrative Account | Source: CNSNews.com
May 11, 2006 6:35AM EST

By Nathan Burchfiel
CNSNews.com Correspondent
May 11, 2006

(CNSNews.com) - A conservative market analyst on Wednesday said that the current national average of $2.90 for a gallon of gas isn't hurting American families any more than the 29 cents per gallon that gas cost more than 50 years ago.

Adjusted for inflation, a gallon of gasoline would have cost about $1.76 per gallon in 1955, but that's not a complete analysis, Jerry Taylor, a senior fellow at the Cato Institute, argued.

Taylor said per capita household income increased at a much faster clip over the last five decades than the price of gasoline. As a result, using the inflation and income adjustments, the current average gallon of gas that costs the consumer $2.90 would have cost closer to $5.17 per gallon in 1955, Taylor said.

Taylor released the data during a panel discussion in Washington, D.C., hosted by the Business and Media Institute (BMI). The BMI is a division of the Media Research Center, which is also the parent organization of Cybercast News Service.

Americans were spoiled by low gasoline prices in the late 1990s, Taylor said, "the lowest prices in recorded history in gasoline markets."

He added that "most Americans think of those prices in 1998 (around $1.21 adjusted for inflation) as reasonably normal prices and so prices today ... seem very, very high." But Taylor said current prices are more in line with historical norms than the prices of the 1990s.

Public hysteria over high gasoline prices is unwarranted, according to Taylor. "I actually saw an MSNBC story the other day which interviewed a pawn shop owner who said people were selling earrings and diamonds and what not to pay for gasoline. Those kinds of stories just make me very annoyed because they are utterly unhinged and they lack a tie to reality," he said.

Bracken Hendricks, a senior fellow at the liberal Center for American Progress, said Taylor's analysis could also be faulty since other expenses have increased since 1955, offsetting the increased incomes.

"I would be really interested to see what was happening with other expenses -- child care expenses, for example," Hendricks said. "When you had ... only one parent working in the family, child care expenses were negligible. With two working parents, all of a sudden there [are] entirely new categories of costs that are making demands on family incomes."

But Hendricks said regardless of Taylor's calculations, "I think there's a substantial problem right now, which is that we don't have real transportation choices." Instead of focusing on whether gas prices are more or less financially painful than in the past, energy experts should focus on transportation alternatives, he said.

"There's no reason why we shouldn't have flexible fuel vehicles on the road where you could substitute ethanol for gas as the prices fluctuated," said Hendricks.

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