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Energy

History of Rising Gas Prices – Part 2

Another week has passed and unlike Wal-Mart’s falling prices, the cost of gasoline continues to rise. Metro-Phoenix’s area average cost for regular unleaded gasoline for the week ending March 8, 2012 was $3.876 – up 8.2 ¢ over the previous week. In Part 1 of this discussion, I shared that our pain at the pump is not news. Since oil is a commodity, and is subject to fluctuations in supply and demand in the market place, rising and falling gasoline prices have a long history in theUnited States.

Focusing on recent history, Figure 1 shows nominal and real prices of regular grade gasoline since 1976. The nominal price in blue is considered to be the price paid at the pump.  A comparison is made to the “real” price, adjusted for inflation, so that past prices reflect “today’s” dollar value as of March 2012. [Source:U.S.Energy Information Administration (EIA)]

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Figure 1: Short-term Energy Outlook, Real & Nominal Pricing for March 2012

Figure 1 provides a visual of the up and down movement of the cost of a gallon of unleaded regular gasoline. EIA reports that consumers paid the highest prices for gasoline in real terms in 1922, 1981, 1982, 2008, and 2011. Unlike old news,U.S.consumers have been discussing gasoline prices for years. It is currently being discussed by both political parties. Rather than crying about those escalating prices, why aren’t we, the citizens, demanding additional remedies to the problem other than lower gas prices?

Re-listening to President Carter’s Malaise Speech of July 1979, it was suggested that we address the energy problem with a war-footing. More specifically, Carter said, “The strength that we need to address our energy problems must not come from the White House, but every house. We can unite this nation around energy. We can win for our nation a new confidence.” Will this country’s struggle to manage rising gasoline prices from a non-renewable energy source go down a similar path like the one taken by theU.S. auto industry? I hope not although some might argue that we are already there.

The Big 3 auto makers recently reported their best profits in years. The last 10 years were a make-or-break proposition for Chrysler, Ford and General Motors. Interestingly, some, but not all of their problems were associated with low fuel efficiency and the rising cost of gasoline. New competitors from other countries likeJapan, thenKorea, and nowChinaandIndia, entered the global market. While the rest of the world was demanding economical vehicles with better fuel mileage,U.S.automakers continued to make bigger, more costly gas guzzlers. These decisions resulted in a loss of market share, competitiveness, brand image, and jobs.

U.S.consumers must demand energy security for our country. Will it take similar challenges and struggles like that of the U.S.auto industry before we can become an energy secure nation? I certainly hope not. We have met the enemy of rising gas prices. It is us. While we are figuring out what to do with us, today’s area average for regular unleaded gas in metro-Phoenix is $3.926.

References: AAA Fuel Price Finder

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About Vi Brown

Vi is principal and CEO of Prophecy Consulting Group, LLC, an Arizona firm that provides business and engineering services to private and public clients. Prior to establishing her consulting practice in 2001, Vi worked with Motorola, Maricopa County Government, Pacific Gas & Electric, CH2M Hill, and Procter & Gamble. As an adjunct faculty member, Vi teaches undergraduate calculus classes and graduate level environmental courses. She is also a professional speaker.

Discussion

3 thoughts on “History of Rising Gas Prices – Part 2

  1. The enemy is us! We want what we want and we want it cheap. Eventually our desires lose us our jobs.

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    Posted by eugenia wheeler | April 11, 2012, 3:40 pm
    • I reminded of the saying, “we have met the enemy and it is us”. Perhaps we have met the enemy, we just haven’t met us.

      Like

      Posted by Vi Brown | April 15, 2012, 5:52 pm
    • Yep. Sadly, too many of us keep doing things the same way expecting different results. I think a lot of this has to do with the difficulty of change – big or small in our lives. We cling to the familiar even when it is not good for us. We also fail to connect the dots, or look further and deeper than a few feet in front of us. Also, the expectationis that someone else is going to make the sacrifice or fix the problem, but it sure won’t be me. I recall the struggle of the US auto makers over the past 30 years. This was difficult as everyone, union and top management, made excuses for why U.S. auto companies couldn’t build better and more fuel efficient cars. They almost lost their shirts in the process, and loss market share that has yet to be recovered. Oh well…

      Like

      Posted by Vi Brown | April 15, 2012, 6:26 pm

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