I read an article today that makes an unintuitive claim that gasoline prices are not, in fact, out of control, and are less than the expected cost that inflation would predict. Leaving aside for a moment that I bought gas at the Flying J in Ohio for $0.69/gallon circa 1998, and even inflation doesn’t account for that much of a price increase over 10 years, the author seems to assume that gasoline prices are somehow a victim of inflation, as if inflation is some external force of nature to which gasoline is subject. If gasoline vendors increase their price, doesn’t this increase cause inflation by increasing the cost of 99.9% of everything? If so, is it valid to claim that gasoline prices are influenced by inflation?
2 thoughts on “Fuel Costs Merely Rising With Inflation?”
I don’t think the article said that. It just said that the price adjusted for inflation hasn’t changed much since 1950. Whether it’s reasonable to expect that it wouldn’t is a different story.
The article doesn’t explicitly say what I said above, but the only way the author’s point could be valid is if the calculation for inflation was independent of rises in gasoline prices. If gasoline prices rise and stay high for enough time, the cost of everything rises. Within a short amount of time, inflation can be re-calculated to incorporate the higher cost of everything, including the cost of the gasoline which prompted the whole thing. The cost of gasoline will often look like it’s keeping in line with inflation, whereas it’s actually causing a large portion of it.
I’m no economist, but I like things to make sense 🙂 The author’s line of reasoning doesn’t make sense.