Perception and the price at the pump

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Morton Marcus

On May 25, 2014, the average price of regular gasoline nationwide, according to the popular app, GasBuddy, was just over $3.68. Ten years later, on May 25, 2024, the price was a bit under $3.68.

If you want to look at gas prices in political terms, forget the President who has extremely little influence on those prices. When Obama handed the baton of state to Trump in 2017, the price was below $2.35. When the exchange was made from Trump to Biden, that average stood about $3.02 per gallon.

During Trump’s time in office, the average price of regular gasoline rose by nearly 29%; for Biden’s term thus far, it has gone up about 20%.

Prices fell to $1.70 in 2020 when Americans stayed home from work and limited other driving during the COVID pandemic. Then prices rebounded to almost $4.35 per gallon as the nation went back to more ordinary times in 2021. Putin’s war in Ukraine in 2022 caused a temporary boost to almost $5.00, a high from which they are descending slowly.

Gasoline prices are posted in bright colors on huge signs easily visible as we drive from here and there. No other product has prices advertised so prominently, routinely in front of our eyes. We are aware of every change, up or down, and we couple that with our memories of prices past.

Friends near my age recall 19¢ in the gas price wars of the early 1960s; we also recall 34¢ a decade later. Virtually every driver recalls a price lower than today’s.

Recently, Indiana’s average gas price is pennies different from the national average, although that variance has been as much 25¢ higher or lower during the past three years.

Within Indiana there are consistently variable prices. In the 30 days from this writing, Evansville’s prices have fluctuated only 5¢ around $3.35; Fort Wayne and Indianapolis have ranged together from $3.30 to $3.75. Most often Gary is about 25¢ higher than Indianapolis, but briefly they were just 3¢ apart.

Back to the national level: The Consumer Price Index (CPI) for regular gasoline in April 2024 was 29.5% ahead of the same month in 2019. During the same period, the CPI for all goods and services increased by 22.7%.

Domestic gasoline prices are subject to international events (Ukraine) and the decisions of the Saudi-led OPEC cartel. But what counts most is how American workers’ earnings are doing relative to inflation. While prices in general have risen by 22.7% in the past five years, earnings have increased by 24.3%.

Want to beat gas price inflation? Unless your job, not your hobby, requires one, don’t buy that gas-guzzling pick-up truck or van. Instead get an economical gas/electric hybrid car like my Prius. (Toyota has not paid me for this endorsement of their product.)

Mr. Marcus is an economist. Follow him and John Guy on the Who Gets What? podcast available at mortonjohn.libsyn.com