Gouged by Gas Prices? Give Me a Break

June 1, 2007— -- Were you "gouged?" buying gas this week? Or maybe over the Memorial Day weekend? Did you pay those record high prices we've heard about? It's time to say give me a break! But … to whom?

Drivers we spoke with called gas prices "ridiculous." And the media says it's a new record. Newscasts on CBS, NBC, ABC all announced new record highs. On Fox News, Jon Scott told viewers, "the average price of gas has hit a record high of, get this: $3.18 a gallon."

Well, get this: It's not a record high. That's what they say in the media, but it's only a record high if you don't adjust for inflation. And that's just silly. You might as well say the movie "Rush Hour II" made more money than "Gone with the Wind." The media ought to quote prices in real dollars, but maybe when they get excited, they just don't bother.

Once you adjust for inflation, it turns out gas cost more 25 years ago, in March 1981. When the 1981 price is converted to 2007 prices (not 2006 prices, as the EIA did), last week's average price of $3.22 is seven cents below the record, $3.29, which by the way was a monthly average. See for yourself at: http://www.eia.doe.gov/emeu/steo/pub/fsheets/petroleumprices.xls

Still, one reason that people are upset by gas prices is that the price is in your face every time you drive by the gas station. (Click here to tell us about gas prices in your neighborhood). But it may surprise them that this year the price of lettuce, broccoli and apples increased much more than the price of gas. You probably don't know that because they don't post big signs like gas stations do.

And think about what it takes to bring us gasoline. First, oil has to be sucked out of the ground, sometimes from deep beneath an ocean or underneath ice, or from places where workers risk their lives. And just to get to the oil means the drill has to bend and dig sideways through as many as seven miles of earth. What they find has to be delivered through long pipelines or shipped in monstrously expensive ships, then converted into three different formulas of gasoline, trucked in trucks that cost more than $100,000 each, and then the gas stations have to spend a fortune on equipment to make sure drivers don't blow themselves up while filling the tank.