Monday, May 26, 2008
Gas prices in Madison rise above $4.00 per gallon over the Memorial Day weekend
It would take more than the pretty landscaping at this University Avenue Shell station to disguise the impact of rising gas prices, which -- although incredibly cheap by European standards -- have now reached a new high by modern American standards.
In constant, inflation adjusted dollars (green line), U.S. gas prices have trended downward for a long time, with occasional blips such as the 1981 peak, when prices reached $2.96 per gallon in 2006 dollars (click on chart to enlarge).
Looking at a year-by-year chart of gas prices in current dollars vs. constant dollars since 1920 is a real eye-opener. It shows that, in real terms, gas prices in the U.S. were at an all-time low in the latter years of the Clinton administration. You can argue whether that's a good thing or a bad thing. It certainly had a lot to do with the SUV and light truck boom of recent years. But one thing is undeniable -- gas prices in real dollars started climbing under the Bush administration and haven't stopped. Peak oil? Asian demand? Speculation and price manpulation? Policy decisions made by an administration filled with oil men at the highest levels? Take your pick, and feel free to pick more than one.
If most observers are right, this is just the very beginning. The days of cheap energy seem to be over, which means that American lifestyles will be very different in the future from what they are today.