Gas Prices
I find it sort of hilarious that it is Conservatives that are demagoguing gas prices and Liberals who are trying to explain that they really are not that high. Yet another example of the Coke and Pepsi parties swapping political positions based on whose team is in the White House.
But I thought this graph was interesting, and supports a point I have made for years (Via Flowing Data)
I have worked in oil fields drilling miles below the surface and on offshore platforms in mile-deep water. I have seen the Alaska pipeline under construction and worked in a 400 thousand barrel a day refinery. And I can say with confidence that no other product on this list even is in the same order of magnitude as gasoline in terms of the capital investment, effort, and technology that does into delivering a gallon of gas. The ability to deliver gas for even $4.00 a gallon is almost unbelievable. Yet no other industry on this list or any other list gets 1/100th the grief oil companies do for being rapacious, greedy, and detrimental to society.
Captain Midnight:
Other than gas, what else do average people buy 10+ gallons of each week? OK, I live in Seattle, so average Starbucks consumption may come close.
And $6 a gallon for milk? Where?
March 22, 2011, 11:11 amSB7:
Maple syrup literally grows on trees and it still costs several magnitudes more than gasoline.
March 22, 2011, 11:24 amDoug:
I don't deny the miracle that gasoline sells as cheaply as it does, but other than gasoline, I can do without all the other items on the list and get by in life just fine. My life is altered drastically without gasoline. Not so for Robitussin. It is the indispensability of gasoline that makes this chart laughably stupid.
If we could package "state and national parks" and sell it by the gallon, I suspect it would sell for more than gasoline, too.
March 22, 2011, 11:38 amTJIC:
> I have seen the Alaska pipeline under construction and worked in a 400 thousand barrel a day refinery.
You've really got to preface that with the phrase "I've seen things you people wouldn't believe..."
March 22, 2011, 11:39 amperlhaqr:
Yeah, I'm afraid I have to go with the comments above. I don't tend to use any of those things by the gallon (well, Red Bull) but I definitely use lots and lots of fuel (both petrol and diesel). It probably cost me $4 to get to my physical therapy appt and back this morning. And given that I'm going to PT, "riding a bicycle" isn't really an option here...
March 22, 2011, 12:06 pmKyle Bennett:
Talk about comparing apples and oranges... damn near literally. I'm not defending conservatives' nor anybody's idiotic complaints of some price being "too high", but this chart is economically meaningless. Worse than useless, it actually feeds into the premises that those misguided complaints are based on. For instance, why isn't a gallon of crude oil in there? Maybe because it would make it too obvious that liquid volume is irrelevant to economic utility? It would be just as meaningful to compare them on some other superficial quantity, such as fiber content. Oh, look, laundry detergent costs 400 times as much per gram of fiber as gasoline!!!
March 22, 2011, 12:10 pmIronman:
Of course, the big difference between these products and the price per gallon of gasoline is that the price of gasoline can be used to roughly forecast what the unemployment rate will be two years from now, while sadly, none of the other products shown can. (I know - I'd love to develop a Guinness-based index....)
Speaking of which, here's a tool where you can do just that with today's prices (use February 2011's 221.309 for the CPI value)....
March 22, 2011, 12:16 pmRick C:
I agree with the commenter above who expressed disbelief at $6 milk. I just bought 2 different gallons of milk in two different stores this week, and paid $1.19 for 2% at Aldi, and I think $1.89 for whole milk at Wal-Mart. I've never seen whole milk over $4, although I will grant that it might do so. And $7.60 for orange juice? Where, on a submarine, when delivered by the Domino's guy?
March 22, 2011, 1:00 pmEvil Red Scandi:
Funny how people who whine so much about oil company profits and the price of gas never bother to look at the government's take versus the evil oil companies...
http://mjperry.blogspot.com/2007/05/gasoline-taxes.html
March 22, 2011, 1:00 pmDCSpotter:
Umm... well...
March 22, 2011, 1:06 pmFor starters, someone should point out how much gas is needed to produce and transport all the stuff listed in the chart and how their price would fluctuate with the rise/fall in oil price.
In addition, none of these items are even in the same neighborhood for an apples-to-apples comparison. How much would a gallon of Coke cost if people were buying it at a coke station with pumps? Assuming it's produced in the same quantities as oil is produced in right now. That might help explain the price point. Or alternately, if gasoline were sold at safeway in 1 gal containers then maybe the price would be much higher.
One third point, just because people are dumb enough to buy Fiji water at over $10/gallon, it doesn't mean we should increase the prices of the other stuff to hide our dumbness...
Foxfier:
Over seven bucks a gallon for OJ? The fancy stuff is more like five or six. Did the get small organic bottles or something? I know they screwed up the Fiji water, too, since the Kmart site says that it's a buck for the 1.05pint bottles.
Makes me wonder what other tail-pulls they did on pricing.
March 22, 2011, 1:08 pm(Besides the obvious one of having pub-prices for the beer. Guess $10/gal wasn't that impressive.[Last week's sale price in a WA state Safeway was $10 for a 12 pack of 11.2oz bottles, and we have insane taxes... on gas AND alcohol, actually...])
Foxfier:
Another big difference is that I'm not aware of the Feds illegally preventing the bottling of fiji water in violation of a court order.....
March 22, 2011, 1:08 pmaczarnowski:
While I also think the chart is a red herring, I'd like to see it corrected for taxes as mentioned by Evil Red Scandi. That could be interesting from a 180 degree point of view.
March 22, 2011, 1:11 pmDan:
Unlike others here, I think this chart is relevant (although some of the prices are a bit off).
I'm not sure there's a way to measure the usefulness of a product. Maybe for some people, Fuji water or nail polish is something they can't live without. For me, those products aren't too important.
But it's hard to argue that gasoline isn't useful for everyone, even those who don't drive (how else would food get to the grocery store?).
Gasoline is one of the most useful substances ever created. With just a gallon of the stuff, I can drive my Prius, with my wife and kids and a good number of our belongings, 50 miles for a price of $4. That's a bargain when you think of how hard it would be to make that same trip without gasoline (we could either push all of our stuff in a wheelbarrow and walk 50 miles, or I suppose we could take a train or bus with all the inconveniences that would bring plus much higher cost).
Our typical summer vacation destination is about 250 miles away, or 500 roundtrip. At 50 MPG and a price of $4 a gallon, the entire trip costs us just $40. Is there a better bargain in the world?
I don't take for granted the usefulness of gasoline, though some do, so I don't quibble with prices at current levels. Even at $5 a gallon (which would raise the price of my trip by a whole $10), it's an incredible deal.
March 22, 2011, 1:13 pmIgnoramus:
".... Attack ships on fire off the shoulder of Orion."
"The Prize" by Daniel Yergin is a surprisingly great history of the oil industry. It doubles as a surprisingly insightful history of the 20th Century. Oil continues to be a big driver in the 21st, even if our government no longer includes it in official inflation figures.
When gas prices were a bit lower, I used to say that the gas outside at the pump was cheaper than the bottled water inside the convenience store. That's a telling comparison. I'm amazed at how much people will fret over penny differences in gas prices -- it's one of the few things we're really price sensitive over.
Back in 2008 -- when we had our last spike in gas prices -- the NYT did a detailed analysis of the effects that >$4.00 gas was having on the "not so rich" folks who lived in rural America and who had to drive a lot, including to get to work. They found that in a great many counties of the USA people were spending on average more than 15% of their total income on gas BEFORE prices spiked. Many of these people got really squeezed when prices went over $4.00.
Cynical me says that the NYT was enjoying some schadenfreude: That those dumb Red State crackers didn't have the sense to live on the Upper West Side ... serves them right for having put Bush back in office, instead of the enlightened John Kerry.
But I was mildly impressed with the detail in the study. Someone had to correlate data at the county level, which sounds like actual work. Not like Maureen Dowd blowing somebody at a Georgetown dinner party to get a lede.
March 22, 2011, 2:26 pmjon spencer:
Here is another comparison chart.
http://www.cockeyed.com/science/gallon/liquid.html
March 22, 2011, 3:06 pmRob:
The statement that "it should be cheap because everyone needs it" is in direct contradiction with basic economics.
March 22, 2011, 4:18 pmFoxfier:
The statement that “it should be cheap because everyone needs it” is in direct contradiction with basic economics.
And it is said... where....?
That said, "This price of this item which is used in large amounts in every aspect of modern life going up shouldn't worry anyone, even when we could rather simply raise the supply and thus lower the price, because here's a list of items that aren't used in large amounts OR all aspects of life that cost more by the gallon" is simply nonsensical, unless you're going for an appeal to emotion.
March 22, 2011, 6:26 pmjoshv:
"You’ve really got to preface that with the phrase “I’ve seen things you people wouldn’t believe…”"
Warren has burned so very very brightly.
March 22, 2011, 7:18 pmScott:
The data on coke is way off. It's less than two bucks a gallon.
March 23, 2011, 5:39 amcaseyboy:
I think Warren's point is that gasoline is not unfairly priced given the investment to extract, transport, refine and distribute. Oil companies rarely lead the ROI performance lists. A second point is that many who complain are those willing to pay more for bottled water and/or Starbucks coffee, both of which I can live without. But I do wish they could lower the price for Guinness.
March 23, 2011, 6:48 amRick C:
As mentioned, there's a lot of variability in pricing. You buy your bottled water in 20oz bottles for $1.50 or so, sure, it's going to cost $6. I prefer to buy my bottled water at $4 for a 35-pack of 20oz bottles at Sam's Club, which makes it less than a buck a gallon if I did the math right.
Of course, that's a digression from the point that the prices on that comparison chart seem overblown in some cases.
March 23, 2011, 8:27 amRick C:
Oh, and another example: the cockeyed.com link has a price per gallon of coke syrup, based, presumably, on buying a bib (the ~5gallon bags of concentrated syrup that you plug into a fountain at a convenience store) and comes out to over $8 a gallon. Well, who drinks Coke syrup? You'd only use a few ounces of syrup--if that--to a gallon of water, and if you're using water from the tap, the marginal cost is approximately zero, so the meaningful measurement, of actual Coke-from-the-fountain by the gallon is measured in pennies. This doesn't factor in the cost of the fountain itself, or carbonated water, which I have no idea of the actual cost.
March 23, 2011, 8:31 amFoxfier:
Rick C-
when I worked at a fast food place in '99, the owner calculated the cost per gallon of served soda at 8c; most of the cost was the price of the cups, straws and lids you'd use to drink that gallon. (That includes all waste, since he was going off of the sales record.) He didn't have the advantage of buying in bulk, either.
caseyboy- I utterly agree that the problem isn't with "greedy oil companies," and that the sheer technology and processing costs are awe inspiring. I simply disagree on the notion that the cost isn't worth complaining about. (I seem to remember a heck of a lot of Republicans kicking and screaming about wanting to make it easier to use our own oil supplies since...oh... about '95? That's when I started on the internet, instead of having to get information from TV....)
March 23, 2011, 10:59 amRick C:
Fox: yep, I spent almost two years working in a convenience store, so I know what bibs cost, and I know the store's COGS etc. The accounting model is that you, the customer, are buying the cup, and the soda is essentially unmetered.
March 23, 2011, 11:28 amJohn:
HP Printer Ink: ~$3000/gal
March 24, 2011, 8:39 pmepobirs:
One really important difference in the price of gasoline and all of those other items. If the price of gas shoots up, so does everything else eventually as that cost is factored in. Any of the other items could shoot up in price without affecting the others.
March 25, 2011, 3:02 amJason:
Rear window defogger repair paint = $14,000/gal.
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March 26, 2011, 3:40 amPete:
Suddenly $250 per gallon for bottom paint for my boat doesn't sound asbad as it used to.
March 30, 2011, 10:40 am