While on vacation, driving around a lot, we’re filling up our tank more than usual and I’m amused by all the faux outrage and caterwauling about high gas prices.
The fact is, it’s cheap now, if you bother to take inflation into account—which people always do when calculating their wages and pensions but suddenly stop doing when it comes to the price of oil and gas. (They make the same mistake when analysing the U.S. deficit, and so on, when a Republican is in office. Suddenly they remember again when a Democrat is in office.)
The price of a barrel of oil would have to rise by 50 percent or more from its current price, just to catch up to what it was in 1980. You only have to look at how people drive—like lunatics in a hurry to die (and to tick people off)—to see that gas prices aren’t the slightest bit “high”—gas is far too cheap judging by what people drive and how they drive it.
Adjusted for inflation, the price in 1980 was about $95 per barrel.
But I found this interesting paragraph in the Financial Post today (from yesterday’s paper).
Yet, the history of the oil industry is replete with exaggerated demand forecasts, pessimistic supply limitations and sky-high prices. The median forecast of experts polled by the International Energy Workshop in January 1986, was for crude oil prices of US$240 by 2005 (in today’s dollars). Four years earlier, the median forecast for 2000 was US$400.
The price of oil today is about $60 per barrel. Oops.
PTBC was founded by Mr. Johannesen in 2000.
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