Heavy Lifting - thoughts and web finds by an economist
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Friday, December 07, 2007
Greg Mankiw points to a graph depicting the cost of 1,000 gallons of gasoline as a percentage of per-capita net worth (Original post here). That's one way to look at the price of gasoline, and one that puts any price increase (and more importantly a price decrease) in perspective.
Mankiw gets a lot more traffic than Heavy Lifting, so I am glad he points to the fact.
Another way to think about the price of gasoline is to look at the cost per mile driven, which has been declining, which I pointed out WAY back in February of 2004!!
Figure 3 is the most telling graph and is the reason why there should be less concern about the price of gasoline. The average cost per mile driven has steadily declined over the past twenty years and technological trends indicate that the cost per mile driven will continue to decline. Consider the hybrids - electric/gas combinations. The new Ford Escape Hybrid is advertised to go between 300-400 miles per tank in town. At the rate I drive, that would mean a fill up every TWO months.
My original post here. Unfortunately, the original document I linked to at the Oregon state transportation website is now gone, but I am going to try to find it again because the graph was very plain - the price of effective use of gasoline has been declining dramatically over the past forty years.
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