Gasoline at US$ 2.41/ gallon is cheap compared to the three dollar price tag the gasoline had in 1980-81 when adjusted for inflation. See the New York Times article “As Gasoline Prices Soar, Drivers Seek More Ways to Save at Pump” (NYT August 13, 2005). The article shows us graphically the continuing trend of decreasing prices for gasoline, but fails to tell us if the few spikes in price caused actual trends showing consumers moved to buying more energy efficient motor-vehicles.

The excellent graph shows that the national average price of gasoline STARTED at about $3 in 1920 and moved downward in a nearly straight line, except for two periods, to about $1.30 in 1997 - 98; the two exceptions were the 1932 - 1944 years caused by the depression and the need to divert oil to Europe during WW II (it reached then $2.75) and then again in 1978 - 1984 - peaking at about $3 in 1980-81. The present ascent in price started in 2002, from about $1.50, and reached on Friday the above mentioned figure - US$ 2.41.

Now compare this with the report from Oslo, Norway (NYT, April 30, 2005): “Car owners in the US may grumble as the price of gasoline hovers around $2.25 a gallon. Here drivers greeted higher pump prices of US$ 6.66 a gallon (recalculated) with little more than a shrug. Considering that since April 30 the price of oil has increased by about 10%, and considering the high taxation of gasoline in Norway, I would thus assume that the price to the consumer in Oslo is now about $7/gallon or at 300% compared to the US price.

The US, by refusing to tax the consumer in order to keep the price to the consumer low, has in effect forced other economies to readjust in their own defensive moves. In the end they carry the burden of our gluttony.

The New York Times article did mention ways simple people try to adjust to the few pennies of the gasoline price increase, and the mention of eventual technologies that will come to fruition only with the help of state governments the like of the California rules; but the real truth came out in today’s Toronto Star article “Fuel Prices not Scary Enough, Yet” (Toronto Star, August 13, 2005): “Luxury sport utility vehicles sales are up 18%, while luxury cars are up 38% for the year … one big reason is that gas prices - believe it or not - are still not high enough to definitely change consumer habits. A typical mid-sized vehicle in Canada costs about Can$ 1,200 -1,500/year for fuel; recent higher gas prices have pushed that up about $ 100-200/year. The vehicle itself costs Can$ 30,000, will an extra $200 make any difference?

Most Calgary, oil rich Alberta, Canada, analysts estimate that for consumers to make a concerted change in their buying patterns, fuel prices would have to increase 50-60%. If we translate this to the US conditions - there is no hope for change before we hit the price level of US$ 4 per gallon of gasoline. Even that will be extremely cheap compared to the above mentioned case of Norway, or most of Europe. (Canadian conditions are closer to the US conditions.) At that price it could be expected that some US customers will start using less fuel.

Even a $4 price tag will give unfair advantage to the US customer.

Further, to reach that figure, it would make more sense to increase US taxation by $1.5, than to wait until the Saudis take this away by increasing the price of crude unilaterally. Have we not learned anything yet from 9/11, 3/11, 7/7 (NewYork/Washington, Madrid, London)?