Slate Magazine published a new piece outlining some of the reasons Americans should feel lucky paying “only” $4.00 for a gallon of gas. Robert Bryce argues the relative “cheapness” of today’s gas in terms of historic prices:
The simple truth is that Americans are going to have to get used to more expensive gasoline. And while they may continue grumbling at the pump, they need to accept the fact that even at $3.50 or $4 per gallon, the fuel they are buying is still a bargain.
This is wrong on a number of levels. Let’s start with the obvious that it’s completely disingenuous to compare fuel costs in 1922 to fuel costs today.
First of all, who was actually driving back in 1922? According to a historical study of vehicle ownership, only 22.7% of Americans owned cars in 1939 (17 years later), compared to 77.6% in 2005. Econ 101 will tell you that when nobody is driving and demand for gas is low, prices will be high for a non-readily available commodity. Until people are driving themselves around, there is no incentive to innovate, mass produce, and therefore cheapen the cost of gas.
Secondly, Slate forgets that driving in Europe is not the same as driving in the United States. Paul Krugman makes this point clearly in his most recent op-ed in which he reminds readers that sure, it may cost more to put petrol in your car on the other side of the pond, but in Europe, drivers have other options — namely city-wide public transportation systems and the option of walking to work, the grocery store, or the pharmacy:
[I]n the face of rising oil prices, which have left many Americans stranded in suburbia — utterly dependent on their cars, yet having a hard time affording gas […] Changing the geography of American metropolitan areas will be hard […] Public transit, in particular, faces a chicken-and-egg problem: it’s hard to justify transit systems unless there’s sufficient population density, yet it’s hard to persuade people to live in denser neighborhoods unless they come with the advantage of transit access.
Slate makes one last point that goes beyond wrong and borders on offensive:
Gasoline is also cheap compared with other essential fuels. A Starbucks venti latte costs the equivalent of $23 per gallon, while Budweiser beer runs $11 per gallon.
Sorry, but Americans aren’t consuming gallons of coffee and beer every morning as they drive to work, school or the doctor. We spend a great deal more of our discretionary budget on gas than on any other commodity. Just another example of Slate’s backwards apples to oranges logic.