Different Situation, But Prices Are Not Unprecedented
In a previous column, I pointed out that — perhaps surprisingly — the price we’ve been paying for gas lately, compared to 90 years ago, is not as high as people would think — that is, once the rate of inflation is factored in to the equation. For instance, while motorists may have been paying only $0.25/gallon in 1919, when converting that number to February 2012 dollars, the cost was $3.35/gallon — a mere 6.5 percent cheaper than 2011′s annual average of $3.57/gallon. The chart below shows the price movement (based on February 2012 dollars) from 1919-2011.
Inflation Adjusted Data
Gas prices are spiraling through the roof like never seen before. People often point to specific years that gas was so cheap, in an effort to blame politicians, Big Oil, or whomever else is the flavor of the day. Indeed, a gallon of gas was going for only a quarter of a dollar in the years after World War I, and even less than that before and after World War II.
But the key fact that’s missing from all the ranting and raving is the rate of inflation. The simple definition of inflation according to Wikipedia is: “A rise in the general level of prices of goods and services in an economy over a period of time.” Keep in mind, that at the end of World War I, average annual income was only $1,500. Currently, annual income is around $50,000.
For this exercise I plotted various sets of data in graphs — sometimes combined — based on information compiled by the U.S. Department of Energy’s (DOE) statistical office, the Energy Information Administration (EIA). The purpose of this two-part segment is to provide a clearer understanding of how much the price of gas has actually gone up relative to a family’s budget and other household costs, and most importantly, during what time frame.
On a recent trip to Canada, I passed through Kingston, Ontario — home to Canadian Forces Base Kingston (CFB Kingston). A solar power installation just off the roadway — inside the perimeter of the base — caught my attention. Unfortunately, the reason it captured my attention was because the solar panels looked like the side of a trash can.
The picture tells the story.
20 Years Down the Road — Will There Be a Marked Change?
While sifting through data in the Energy Information Administration’s (EIA) Annual Energy Outlook 2012, I came across some tidbits that I thought would be interesting to share with readers and graphed it to bring out the points.
What we’re looking at here are the sources — and percentage of those sources — of the generating mix of electricity in the United States, as projected for the years 2012 and 2035.
In 2012, coal is projected to provide three and a half times the amount of electricity as renewables will. By 2035 that will be reduced to less than two and a half.