Why Are Gas Prices So High? Some Experts Believe They’re Not High At All.
Believe it or not, some experts say that all this talk of high gasoline prices is nonsense, after all, the strain these outrageous increases put on consumer’s pocketbooks may be as little as $25 a month depending on driving habits, says Cato Institute, a public research foundation.
It’s not the first time in recent history that gas prices have taken a leap the way they’ve done the past couple of years. However, if you factor in inflation, gas mileage of current vehicles and the American family’s average income, it’s not so bad after all. Investor’s Business Daily did exactly that and here are some of the results they found:
In 1981, gasoline sold for an average of $1.38 per gallon. After inflation is factored in, the equivalent would be $2.74 in today’s currency. When compared to the change in disposable per capita income, prices would have to be $4.30 today to have the same impact.
From an economics perspective, saying that gas prices are “too high” implies that consumers are being taken advantage of. However, if supply and demand are steady, then prices are just what consumers are willing and able to pay. Sounds tricky, but according to the National Council on Economic Education, it is part of the way the market works and the best proof is that demand remains high in spite of rising gas prices.
According to an Investor’s Business Daily study, there are several reasons that lead to this wrongful perception of high gas prices. For starters, drivers today remember 1998, when gas prices were at their lowest since 1949. There’s also the political context, of course. And some even dare to blame taxes and unrealistic environmental regulations, for the increase in the cost of gas.
The experts on this side of the fence believe that, just like in the seventies and eighties, drivers will keep on driving.
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