Americans are worried about inflation. The cost of just about everything–food, cars, property insurance, etc–has gone up under the Biden administration. I often hear Biden’s critics complain about the cost of gasoline.
Gas prices, however, are quite low. I bought gasoline yesterday in Baton Rouge and it only cost me $2.60 a gallon to fill my tank. That’s pretty damn cheap!
Remember the Arab oil embargo of 1973, when gas prices shot up? The average cost of gas that year was 39 cents a gallon. The present value of that 39 cents is $2.59 —almost exactly what I paid yesterday.
For a brief time in 1973, gasoline prices rose to one dollar a gallon, sending trepidations of doom across the entire United States. I remember pumping gas for my old pickup truck and charging it on my new Shamrock credit card. I asked myself whether I would have enough money to pay my bill when it came due.
What is the value of that 1973 dollar today? It’s more than $7.00. Except for a few places in California, no American is paying anywhere near $7.00 for gasoline.
In other words, Americans are paying less for gasoline than they did under the 1973 Arab oil embargo, which is curious. After all, the Biden administration has actively discouraged oil exploration in the United States. One might think Biden’s policies would hurt the price of gasoline, but they haven’t.
In addition, international tensions in the major oil-producing countries haven’t had any sustained impact on the price of gas for our cars. Uncle Sam and NATO embargoed Russian oil because Russia invaded Ukraine, but that tactic has largely failed. Surprisingly, the Russian economy is growing despite the embargo, and gasoline is still cheap in this country.
Looking to the Middle East, that region is on fire. The Houthis are doing their best to disrupt the flow of oil tankers through the Red Sea, forcing many shippers to bear additional costs to avoid passing through the Suez Canal. So far, however, Houthi missiles haven’t impacted gasoline prices in the U.S.
All this will change after the November presidential election. If Trump wins, gasoline prices will shoot up, and the Democrats will blame him. I’m not sure Trump’s policy of ‘drill, baby drill’ can be implemented quickly enough to depress the price of gas at the pump.
If Harris wins, the Feds will manage to tamp down the price of gasoline for a time, but ultimately. their bureaucratic machinations will fail. In short, gas prices will soon increase dramatically, and then we’ll see some real inflation.
