Fuel Prices

[mryaris]

Originally Posted by Yar Is Word

"The cost to produce a gallon of gas is about $.90"

That book was written in 2008.....a lot has changed in 2 years. Today, refining is approximately 9% of the price of gas. In July 2010, the US average for a gallon of regular unleaded was $2.73, so refining costs are about 25 cents.

Assuming $2.73 a gallon, about 40 cents are taxes, 25 cents to refine, $1.80 for the oil itself & about 27 cents for distrubution & marketing, etc.

http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp


Also, historically speaking, we are paying about as much for gas as compared to median household incomes as we always have. There are, of course, spikes and drop offs, but generally speaking we have always paid about 10% of the median hourly wage for a gallon of gas.

The median US income in 2010 (approx.) is $52000, which equates to $25/hour. Yes.....I know not everyone makes that much but for historical statistical analysis it is irrelevant (just so long as the same computations are used....so you can compare apples to apples). Anyway, 10% of $25 is $2.50 and we are paying about $2.75 a gallon right now so it's a little more than 10%. I gathered up median household incomes & average price of a gallon of gas since 1960 (in 5-year increments) and aside from a huge spike in 1980 and the dip in the 1990's, all are within a few points of each other.

I guess what I am saying is we are essentially paying the same for gas today as we always have (in relation to our income), so even though it is pushing $3/gallon right now it is the same as we were paying in 1985 when gas was $1.20/gallon (due to higher levels of income).

I'll try to type in my chart, but it may not turn out very well. Here's the layout:

(I divided the annual salary by the typical 40 hour work week, or 2080 hours per year, to arrive at the median hourly wage).

Year/median annual income (hourly wage)/Price of 1 gal/ratio of 1 gal/hour

1960/$5600($2.69)/$0.31/11.5%
1965/$6900($3.32)/$0.31/9.33%
1970/$8734($4.20)/$0.36/8.57%
1975/$11800($5.76)/$0.57/10.05%
1980/$17710($8.51)/$1.25/14.68%
1985/$23618($11.35)/$1.20/10.57%
1990/$29943($14.40)/$1.16/8.05%
1995/$34076($16.38)/$1.15/7.02%
2000/$41994($20.19)/$1.52/7.53%
2005/$47084($22.64)/$2.48/10.95%
2010/$52029($25.01)/$2.72/10.87%

I got my numbers from government websites (IRS, BLS, etc.) and may or may not be 100% accurate (as far as actual median incomes), but should be very close.

I will re-crunch the numbers using the minimum wages and see how they stack up, but the above figures indicate that as a function of income, gas prices have been pretty consistent over the past 50 years.

So quit whining about how much gas is and get a better paying job!