Gas Prices...
 

I just started watching an older movie, The Survivors (1983) starring Walter Matthau and Robin Williams. In an opening scene, Robin Williams pumps gas at a station owned by Walther Matthau's character. I found it interesting that gas prices at the time the movie was shot were $1.41/gal for unleaded. That is roughly comparable to today's prices, 26 years later with no adjustment for inflation. I find it incredible that we have subsidized gasoline to the point that prices have not changed in 26 years. Can anyonce think of exmaples of other commodities that have similar price histories?

Coke.

In 1982 based on my memory and WikiAnswers Coke was about $1 for a liter. You could get a 2 liter bottle for a bit more or less if you got it on sale.

How much does Can of Coke cost? - How Much At Your Place .com

Today, I can get a two liter bottle for about the same price.

I think the price of gas has more to do with the abundant supply of oil on this planet. Price spikes are often due to factors outside of the amount of oil in the ground.

ahh, the good old days ;) ...I recall buying gasoline when it was under $0.30/gal (U.S.). Back then cigarettes cost ~ $0.22 a pack.

I bet other commodities with pricing manipulated by our government or other cartels also show "deviant" behavior...I don't have data but I'd expect to see that for corn, milk, gold.

I recently came across this graph that shows "inflation adjusted" price of gasoline and it does not even include the most recent drop back to "normal" ~$2 +/- levels that are currently in effect.

http://i59.photobucket.com/albums/g2...esadjusted.jpg

I don't understand the point of this thread at all. Most commodity prices follow inflation with exceptions if the cost of production or demand changes suddenly. That is pretty much what the graph shows for oil. Demand is inelastic but the cost of production gradually decreases over time. The two spikes have obvious causes, the 79 oil crisis and the 08 financial bubble. You'll note that movie was produced shortly after the former. Now, as the graph needs to be updated to reflect, prices are almost back to where they were. One could expect the cost of production to INCREASE gradually in the future, but despite the protests of the peak oil crowd that still has yet to happen.

The point of things for me is that government subsidies have kept gas prices artifically low since the 1970s (with the exceptions of the two spikes you noted). I support eliminating the tax breaks for big oil so market conditions for oil and gasoline can determine the true price. I believe that once a true market price is achived, green alternatives will become more economically viable. Only at that point can we kick our oil addiction.

I'm starting to think that gas prices going up last spring was what popped the housing bubble.

If I had to guess, knowledgble investors had to get out of the housing game, so they bought commodities like oil. People drove just as much, but switched what they were spending money on. More money was leaving the country. Companies that could raise prices or charge a surcharge did (and some haven't removed them yet). Companies weren't making as much money, and didn't hire or laid-off staff, which increased foreclosures and lowers home demand and prices.