[Pops]

Someone here once posted a list of how much gas one could buy with an average salary over the years – it was interesting.

Average daily salary / cost of the average commute would be interesting also.

And at the low end, minimum wage / avg. price.

[jdumars]

That's exactly the kind of comparison I would like to see. It definitely seems more meaningful than these over-simplified figures people toss around so quickly. Life is really complex!

[UncoveringTruths]

My response to this inflation claim "Is your budget adjusted for Oil inflation?" Obviously we are finding out the answer is "no".

It has gotten clearer that PO folks need to be careful when talking with the average Joe about the PO issues. Some people I have tried to talk with PO about are getting angry I had a friend snarl at me.

There was a chain email that I saw suggesting consumers quit buying from Exxon and Mobile. I tried to explain that there was only so much gas and the competitors would not be able to supply this proposition and would just end up buying Exxon/Mobile gas. Oh the looks I got from him.

[pup55]

http://www.peakoil.com/fortopic1121.html+depletion
http://www.peakoil.com/fortopic359.html+wage
http://www.peakoil.com/fortopic2228-30.html

I post these once a week or so. I nominate them for a sticky.

Since the time these were posted, the rise in gas is now an all-time record if you are a minimum wage worker. You can only buy 2.06 gallons of gas for an hour’s work.

$this->bbcode_second_pass_code('', 'Min Wage Gas Price Gallons/Hr
1967 1.00 0.33 3.03
1974 1.90 0.53 3.58
1981 3.10 1.35 2.30
1998 5.15 1.12 4.60
2004 5.15 2.05 2.51
Current: 2005 5.15 2.50 2.06')

For somebody “middle class” you are still slightly better off now than you were in 1981 and 1982. Reason: interest rates are still relatively low, which means that the mortgage payment for the proverbial average house is still relatively cheap. At current interest rates and house prices, gas must rise to about $4.60 per gallon, and oil to about $120 per barrel in order to equal the pain of 1981, or, there must be a substantial change in interest rates or property values.

In general, the bottom 2/3 of the wage earners are experiencing more pain than the 1973 era, but not as much as the 1981 era. Note, however, that the top-income people actually have it better now than in the “pre-US peak years” Incomes for the top earners have outpaced inflation, that plus combined with low interest rates and relatively cheap housing means a “golden age” for the fatcats, as it were.

[khebab]

pup55, it will be interesting to calculate the number of kms/Hr worked using an estimate of the average car mileage at that time. I think Gallons/Hr is a good indicator but does not account for improvements in car efficiency.

[Pops]

Stickey it is.

I thought that was you...

[pup55]

$this->bbcode_second_pass_code('', 'year miles trav fuel eff fuel cons/veh fuel price income fuel expense veh/f
1970 10.3 13.5 760 0.36 $8,688 274 32
1975 9.7 13.9 695 0.57 $11,787 396 30
1980 9.1 15.9 576 1.22 $17,807 702 25
1985 9.8 17.4 559 1.2 $23,735 671 35
1990 10.5 20.2 520 1.22 $29,781 635 47
1991 10.6 21.1 501 1.2 $30,147 602 50
1992 10.8 21.0 517 1.19 $30,631 615 50
1993 10.8 20.5 527 1.17 $31,272 616 51
1994 11.0 20.7 531 1.17 $32,385 621 52
1995 11.2 21.1 530 1.21 $34,106 642 53
1996 11.3 21.2 534 1.29 $35,486 688 52
1997 11.6 21.5 539 1.29 $37,177 695 54
1998 11.8 21.6 544 1.12 $38,967 609 64
1999 11.8 21.4 553 1.22 $40,750 675 60
2000 12.0 21.9 547 1.56 $42,233 853 50
2001 11.8 22.1 534 1.53 $42,629 818 52
2002 12.2 22.0 555 1.48 $42,802 822 52
2003 12.2 22.3 550 1.51 $44,086 830 53
2004 12.3 22.3 550 1.95 $45,409 1,073 42
2005 12.3 22.3 550 2.5 $46,771 1,375 34
est 12.3 22.3 550 3.40 $46,771 1,871 25 ')

[jaws]

It's impossible to construct an unbiased deflator for prices, since demand and supply naturally fluctuates for all goods regardless of how much money inflation there is. What you can do is construct a linear comparison of the price of oil vs. the price of various other goods and services. It should give you a good picture.

[pup55]

Here is khebab's data, courtesy of:

Bureau of Trans Statistics

The data only goes up to 2003 so I extrapolated on the last two years.

khebab is right: the average vehicle is more efficient than in the 70's.
But, people are driving a little further.
If you measure fuel consumption per vehicle, then compute operating cost per vehicle (fuel cons times travel) and divide income by this, you get the number of vehicles a family can afford to operate with the given level of income.

The 1980 value of 25 was the worst. In 1982, fuel was $1.35 so that made the value only about 23, assuming the fuel efficiency and mileage did not change too much.

Today's value of 34 is defnitely on the low end. If the price of fuel goes to $3.40 per gallon, this number will be surpassed.

[khebab]

$this->bbcode_second_pass_quote('pup55', '[')code]year miles trav fuel eff fuel cons/veh fuel price income fuel expense veh/f
1970 10.3 13.5 760 0.36 $8,688 274 32
....
2005 12.3 22.3 550 2.5 $46,771 1,375 34
est 12.3 22.3 550 3.40 $46,771 1,871 25 [/code]

[pup55]

Here is a simplified calculation: The unadjusted family income divided by the fuel price. Family income is the median of the "middle fifth" of income, namely the middle of the road family:

$this->bbcode_second_pass_code('', 'yr income fuel I/f
2005 $46,771 2.5 18,708
2004 $45,409 1.95 23,286
2003 $44,086 1.51 29,196
2002 $42,802 1.48 28,920
2001 42,629 1.53 27,862
2000 42,233 1.56 27,072
1999 40,750 1.22 33,402
1998 38,967 1.12 34,792
1997 37,177 1.29 28,819
1996 35,486 1.29 27,509
1995 34,106 1.21 28,187
1994 32,385 1.17 27,679
1993 31,272 1.17 26,728
1992 30,631 1.19 25,740
1991 30,147 1.2 25,123
1990 29,781 1.22 24,411
1989 28,925 1.06 27,288
1988 27,291 0.96 28,428
1987 26,055 0.96 27,141
1986 24,979 0.93 26,859
1985 23,735 1.2 19,779
1984 22,547 1.2 18,789
1983 21,105 1.23 17,159
1982 20,195 1.28 15,777
1981 19,141 1.35 14,179
1980 17,807 1.22 14,596
1979 16,495 0.88 18,744
1978 15,010 0.65 23,092
1977 13,671 0.64 21,361
1976 12,762 0.6 21,270
1975 11,787 0.57 20,679
1974 11,206 0.53 21,143
1973 10,402 0.39 26,672
1972 9,625 0.36 26,736
1971 8,965 0.36 24,903 ')

In order to reach the level of 1981, which was the worst, the price of gas will have to exceed $3.30 per gallon.

Currently, it's worse now than it was in 1973, for the middle income family. It's the equivalent of about 1984.

Interesting that in both of these estimates, a price of $3.30 to $3.40 will give you equal pain to 1981. This means that in certain parts of the country, and for certain people, we are already there.

[Pops]

That’s great pup!

I’m somewhat surprised the miles traveled hasn’t risen more. Still nearly a 50% reduction in veh/f since ‘98

Can you post these to your stickey?

[frankthetank]

Very interesting...maybe if someone could add in some food prices between then in now, considering food is also an essential part of every americans life.

So 81 was bad? I'll have to ask my parents about what it was like in this time period.

[khebab]

Any good work deserves a good graph:

[Pops]

I love pictures!

[pup55]

1980=enough pain to induce recession. Not far to go.

[NEOPO]

errr Now I know how Lewis Black feels!!!

[ohanian]

1984

Winston examined the four slips of paper which he had unrolled. Each contained a message of only one or two lines, in the abbreviated jargon -- not actually Newspeak, but consisting largely of Newspeak words -- which was used in the Ministry for internal purposes. They ran:

* 17.3.84 bb speech malreported africa rectify

* 19.12.83 forecasts 3 yp 4th quarter 83 misprints verify current issue

* 14.2.84 miniplenty malquoted chocolate rectify

* 3.12.83 reporting bb dayorder doubleplusungood refs unpersons rewrite fullwise upsub antefiling

With a faint feeling of satisfaction Winston laid the fourth message aside. It was an intricate and responsible job and had better be dealt with last. The other three were routine matters, though the second one would probably mean some tedious wading through lists of figures.

Winston dialled 'back numbers' on the telescreen and called for the appropriate issues of The Times, which slid out of the pneumatic tube after only a few minutes' delay. The messages he had received referred to articles or news items which for one reason or another it was thought necessary to alter, or, as the official phrase had it, to rectify.

For example, it appeared from The Times of the seventeenth of March that Big Brother, in his speech of the previous day, had predicted that the South Indian front would remain quiet but that a Eurasian offensive would shortly be launched in North Africa. As it happened, the Eurasian Higher Command had launched its offensive in South India and left North Africa alone.

It was therefore necessary to rewrite a paragraph of Big Brother's speech, in such a way as to make him predict the thing that had actually happened. Or again, The Times of the nineteenth of December had published the official forecasts of the output of various classes of consumption goods in the fourth quarter of 1983, which was also the sixth quarter of the Ninth Three-Year Plan.

Today's issue contained a statement of the actual output, from which it appeared that the forecasts were in every instance grossly wrong. Winston's job was to rectify the original figures by making them agree with the later ones.

As for the third message, it referred to a very simple error which could be set right in a couple of minutes. As short a time ago as February, the Ministry of Plenty had issued a promise (a 'categorical pledge' were the official words) that there would be no reduction of the chocolate ration during 1984.

Actually, as Winston was aware, the chocolate ration was to be reduced from thirty grammes to twenty at the end of the present week. All that was needed was to substitute for the original promise a warning that it would probably be necessary to reduce the ration at some time in April.

[pcoates]

I looked at the two graphs first posted, and back calculated the infration multipliers used for the inflection points before and after the peak and for the peak itself. I hoped to get some nice inconsistency, but no. What are get is the following

$66 graph
1st inflection point, 3
peak, 2
2nd inflection, 1.68

$94 graph
1st inflection point, 2.8
peak, 2.5
2nd inflection point, 1.7

What this does tell us is that someone is manipulating the inflation multipliers (surprise, surprise). but they have been a little careful in how they have done it. Inflation was fairly rampant at the time, so all they really had to do was use CPI from teh beginning of the year instead of monthly firgures, or some such slight of hand.

[sicophiliac]

Ok lets get away from oil prices for a second and turn to what more directly impacts consumers, gas and diesel prices. I remember hearing on the news oh maybe 2-3 years ago that the previous inflation adjusted record for the price of gasoline was like 2.80ish national average. Does anybody here have some facts specifically on that? If thats the case then were pretty much in uncharted territory with the aftermath of Katrina and gas prices across the country surging past 3 dollars a gallon. I saw diesel at 3.55 per gal !!!!! Yep 3.55 ! here in San Jose CA, cheap stuff is 3.20+ easy. Back in the late 70s inflation was past 10% with prices that high.. I dont see how our economy can go on much longer without inflation shooting through the roof. Id give it another month or so before we start to really see the effects take hold.