A Little More Perspective on Gasoline Prices

The Albuquerque Journal is up to their usual hyperbole about gasoline prices. There is no question that gasoline prices have been going up; and that hurts. We never like it when the price of something goes up; but we enjoy it when the price of something goes down.
The problem with the Journal article is that it provides no context as to your tradeoffs today versus those in the past. Albuquerque’s reported price per gallon of $2.44 is still 85 percent of the inflation adjusted price in 1981. The 1981 price still holds the record in inflation adjusted terms.
More importantly, on average you “empty your wallet” a lot less today than you did in 1981. In 1981 if you “emptied your wallet” of 10 percent of New Mexico’s average annual disposable income of $8,255, you could buy you 611.5 gallons. Today if you “emptied your wallet” of 10 percent of New Mexico’s average annual disposable income of $25,100, you could buy 1,028.7 gallons. In other words, New Mexico’s average annual disposable income can buy 68 percent more gasoline today than it could in 1981!
That’s not all. Vehicles get some 30 percent more miles per gallon than they did in 1981. The result: New Mexico’s average annual disposable income today can buy 117 percent more vehicle miles than it could in 1981!

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