For 28 years, when the price of gasoline spiked, there was one consolation: Adjusted for inflation, it was lower than in times past – often lower than even the 30 cents or so motorists paid for a gallon of regular in 1950s.
Now even that consolation is fleeing.
On Monday, the price of oil peaked at $103.95 a barrel – a genuine record, even adjusting for inflation. The declining dollar is much of the reason. The previous record occurred in 1980, when OPEC was manipulating the market and petroleum peaked at the 2008 equivalent of $103.76.
This won’t surprise anyone who doesn’t ride in the back of a limousine. Gasoline rises and falls with the oil market, and the average price of gas in Tacoma is now running around $3.44 a gallon. It doesn’t seem that long ago that $2 seemed extortionate, but some experts are predicting a gallon could hit $4 sometime this year.
High oil and gas prices exact a terrible toll on the low-income. They eat into the grocery budget of those who must drive extensively as part of their livelihoods or education. For rich and poor alike, they drive up inflation both directly and indirectly. High-cost diesel translates into higher-cost products, since most of everything bought and sold in the United States is transported by diesel-burning trucks and trains.
Still, there’s healthy medicine mixed in with the distress. A good part of the surge in petroleum prices results from something that’s never going to change: intensified demand from China, India and other once-poor but rapidly expanding Asian economies.
Eventually – no one’s sure when – the supply side of the equation will turn vicious as the earth’s oil reserves start to run dry.
The only solution to those inflexible factors is conservation and transition to other forms of power. Today’s traumatic prices have begun to persuade Americans to do both. The Wall Street Journal reported Monday that Americans have finally begun to drive less, and are buying vehicles that are less gas-thirsty.
If it continues, this trend could ease this country’s dangerous dependence on foreign oil and petroleum in general. Costly gas is bound to accelerate the development of cheaper alternatives.
The Journal summed things thusly: “Economists and policy makers have puzzled for years over what it would take to curb Americans’ ravenous appetite for fossil fuels. Now they appear to be getting an answer: sustained pain.”
Americans will learn to get around on something other than gasoline. But not, apparently, until it really starts to hurt.
