The Miracle of Gas Prices
I have written before about how amazing it is that gasoline can be delivered to your car so cheaply. The investments, the technological complexity, the distances covered, the molecular-level processing necessary, the density of retail distributions establishments -- they are all simply staggering.
I hate to steal this in full from Mark Perry, who has an awesome blog, but he has a list of the price per gallon of other liquids you buy. Think about the complexity of, say, orange juice as opposed to gasoline.
| Product | Cost Per Gallon |
|---|---|
| HP Printer Ink | $4,500 |
| Nyquil | $107.52 |
| Premium Vodka | $76.80 |
| Honey | $46.72 |
| Hair Gel | $44.80 |
| Pancake Syrup | $32.26 |
| Red Bull | $28.00 |
| Windex | $23.81 |
| Real Lemon Juice | $22.91 |
| Soy Sauce | $22.66 |
| Chicken Noodle Soup | $21.25 |
| Mouthwash | $19.65 |
| Tide Laundry Detergent | $18.18 |
| Dawn Dish Detergent | $17.92 |
| Craft Beer | $17.78 |
| Mustard | $17.41 |
| Mayonnaise | $17.02 |
| 409 Cleaner | $16.64 |
| Ranch Dressing | $16.00 |
| Half and Half Cream | $15.87 |
| Shampoo | $15.36 |
| Spaghetti Sauce | $14.59 |
| Ketchup | $13.95 |
| Vegetable Oil | $13.44 |
| Orange Juice | $11.69 |
| V-8 | $10.37 |
| Tomato Juice | $9.47 |
| Juicy Juice | $8.83 |
| Cranberry Juice | $7.94 |
| Soy Milk | $6.66 |
| Gatorade | $6.53 |
| Apple Juice | $6.00 |
| Iced Tea | $5.89 |
| Ammonia | $4.10 |
| Milk | $4.00 |
| Pepsi | $3.71 |
| Vinegar | $3.07 |
| Sparkling Water | $2.94 |
| Gasoline | $2.05 |
Matthew Slyfield:
It is not at all surprising that Gasoline is the cheapest item on that list. Don't forget that gasoline is a necessary input to the deliver if not the production of every other item on the list.
January 21, 2015, 12:16 pmSam L.:
Milk--Seems to me I read something about price supports or a set minimum price. I bought a half gallon for $1.79 last week.
January 21, 2015, 2:01 pmJake:
Last time I checked, rear window defogger paint (in a repair kit) was $14,000 per gallon.
January 21, 2015, 2:03 pmMatthew Slyfield:
Yes, there are price supports for liquid milk (but not for solid milk products). Those price supports are based on the distance from a specific town in Wisconsin (I forget which one). This is why nearly all milk produced in Wisconsin goes into solid milk products (cheese, ice cream, etc).
January 21, 2015, 2:25 pmMike Powers:
And if I burned HP printer ink by the gallon this would be relevant.
January 21, 2015, 3:05 pmDan Wendlick:
Milk pricing at the farm is complicated, with farmers basically getting paid separately for the skim and butterfat portions. Current pricing here in WI is around $14 per hundred pounds at 3.5% butterfat, or around $1.12 per gallon of whole milk. The retail price above that goes for transportation, processing, and the cost of the container it comes in.
January 21, 2015, 3:23 pmIt appears after a cursory investigation that milk prices are above their floor levels now, which are based on the Boston wholesale delivery price.
kidmugsy:
Geeze, you overpay for sparkling water in the US. Ours (UK) costs 19p (ca 32 cents) for a two litre bottle: call it 60 cents for a US gallon. You're paying five times that. I blame that Barack Obama.
January 21, 2015, 4:28 pmmarque2:
It gets more complicated than that. Every few years it changes. Eau Claire, WI, seems to be a constant. The northeast had their milk program based on the distance from Boston. (Further from Boston, the more funds you would get because it cost money to ship it to Boston. ) Now the subsidy is based on the Price of milk in Boston.
http://en.wikipedia.org/wiki/Milk_Income_Loss_Contract_Payments
January 21, 2015, 7:51 pmHenryBowman419:
Well, keep in mind that most of the items listed require one to actually produce them, somehow. Most oil, especially in places like Saudia Arabia, is basically pumped from the ground for nearly zero cost. And, keep in mind that the prices listed for gasoline are inflated by 35-80 cents/gallon due to taxes.
January 21, 2015, 8:59 pmSera:
I could ignore everything on that list, for the rest of my life, and nothing would happen. Except for the gasoline.
January 21, 2015, 10:20 pmchembot:
Of course the pumping itself is low cost once the well is established, but like a number of other industries the infrastructure cost and exploratory costs are enormous, things the farming community faces on much lesser scale. That would be like saying the cost of stamping a CD is almost zero, so that is why software costs so little. And yet, somehow the Microsoft bloatware on most computers costs $200-300 per CD.
The real story on a lot of these prices is that they are thoroughly manipulated through tariffs, subsidies, price floors, and the like. In others, it is 1st party branding like HP ink. (Kind of amazing to think how much value branding adds to a product when you think about it... For instance, printer ink drops to ~$160/gal if you are talking about 3rd party refill kits.)
January 21, 2015, 11:57 pmChris Smith:
You need "Real Maple Syrup" in that list. Pancake syrup is an abomination.
January 22, 2015, 7:21 amChris Smith:
Well, luckily for all of us, no company takes advantage of that program by placing a dairy product factory in a location surrounded by small dairy farmers.
January 22, 2015, 7:24 amMatthew Slyfield:
1. Many companies do exactly that.
January 22, 2015, 8:43 am2. Most of those companies gain no benefit from this program as they mostly produce solid dairy products (butter, cheese, ice cream). The program under discussion covers only liquid milk intended for delivery to the end consumer as liquid milk, it does not cover solid dairy products.
Chris Smith:
Yeah, when I first read your comment, I thought you were talking about the Northeast Dairy Compact, which was killed in 2003(?). And the small dairy product company in Burlington, VT that got the benefits of milk overproduction from the price being propped up by government intervention.
January 22, 2015, 11:31 amsch:
I was always surprised at how cheap liquified gases were: N2 roughly $2/gal O2 $3/gal and H2 $6/gal. These are for relatively small
January 22, 2015, 12:14 pmquantities, the bulk (truck load) will be significantly less. Liquid N2 is mostly a waste product that is discarded unless a local industrial use
is available.
sch:
The mouthwash reminded me of my early years in medicine: for alcoholics a half gallon of Kmart mouth wash at $10 or so and 20%
January 22, 2015, 12:19 pmalcohol content was a pretty cheap drunk and left them smelling a lot better than a beer/ whiskey drunk.
Educated Savage:
I agree. Level all those items to their average usage and it tells a different story. I've spent thousands on gas and probably less than $200 on ink in my whole life.
January 23, 2015, 10:28 amDOuglas2:
Different market, different market segment. In the USA sparkling water is a fru-fru posh thing, and half the point is to show your guests that you are drinking imported-from-Europe water. A Tesco Value plastic 2L wouldn't have the same cachet.
January 23, 2015, 12:34 pmxpatYankeeCurmudgeon:
Surely soy milk at $6.66/gallon puts things in perspective for your average economic illiterate on the Left.
January 24, 2015, 1:00 amAustin Lerwick:
Yeah, I know that when the gas and gasoline price will change than it's effect on all type of products.
gas and gasoline
April 3, 2015, 5:01 amcesium62:
Gosh, look at that. Things that you use in high volume cost less than things you use in low volume. Tap water for 2 cents a gallon? Water delivered to your house in 5 gallon containers for less than $2 per gallon?
February 22, 2017, 2:08 am