Journalism—with a few exceptions—has not been doing its job on the gas price story. The simple truth is that the price of gas now, in real dollars, is remarkably low.
Nearly all news coverage on this story has used raw dollar figures for gas prices. But when adjusted for inflation, the price is only moderately higher than the post-1973 low of January 1999. Prices were higher many times in the recent past. The main reason they seem high now is that consumers have been spoiled by an extended period of low prices that began in 1996 and hit a post-1973 low in 1998.
UNR economist Thomas Cargill says he thinks reporters fail to convert gas price figures because “it takes most of the spectacularism out of the news if you deflate it. If you say, ‘Compared to 20 years ago…’— that’s not news.”
1973 is a benchmark year because the United States stopped living in a fool’s paradise of oil prices that year. In October 1973, the Arab members of the Organization of Petroleum Exporting Countries used their power as a cartel during the Yom Kippur war to stop shipping oil to nations that supported Israel against Egypt in the conflict, sparking what became known as the 1973 Oil Shock. Gas prices shot up four-fold, and, while they eventually came back down (and it took 10 years to happen), the world never returned to the low prices of the earlier 20th century.
Right now, the price of gas, in real dollar terms, is exactly what it was in 1985 and 1978, according to the U.S. Energy Information Administration. And prices are only two thirds what they were in 1980 and ’81. Moreover, gas as a proportion of the total spending of most people today is also very low.
In addition, the United States is the world’s bargain basement for gasoline, according to research by Britain’s Automobile Association and the Dallas Morning News (which on Sunday devoted a full page to gas price myths). In Europe, it runs from a low of $3.46 a gallon (Poland) to a high of $5.64 (Holland).
Why journalists generally don’t provide this kind of context is anyone’s guess, since it’s a simple process to do the math. Inflation calculators are easily available on the Internet these days (if you’d like to do the math yourself, there’s one at www.westegg.com/inflation/).
Finally, while most reporters put a viewing-with-alarm tone to their gas price stories, in fact there are upsides to people driving less. It means fewer traffic accidents, less pollution and less resulting health care problems, and preservation of petroleum for other more useful purposes. UNR scientist Glenn Miller says there are better things to do with petroleum than drive.
“Oil contains so many valuable chemicals that we should not just be burning them up because we’ll need them in the future. They are used for everything from prescription drugs to agricultural chemicals to plastics.”
Miller also says any adverse reaction to gas prices helps Lake Tahoe and the Truckee River.
“Pollutants out of exhaust causes heavy molecular [contaminants] to be absorbed into the ground and then run off into the rain and into the lake. I’ve got a graduate student who’s doing a thesis on this. The Truckee River is the same thing. These things get absorbed into fine sediments and flow down the river.”