I went and looked up the inflation factor on “Dollartimes.com/inflation factor” for the interval from 1958 to today (Wednesday 2-20-13). It was 7.7 to 1.
I remember the 1958 price of a 6-ounce glass bottle of soda pop from a vending machine. It was 6 or 7 cents. That would equate to 12-to-14 cents for the 12-ounce serving typical of today. (Hmmm. Serving size of a sugar-water drink has doubled. Do you ever wonder why we have an obesity epidemic? You shouldn’t.)
Corrected by the inflation factor, those 12-ounce serving price figures correspond very closely to the typical $1.00 per can from a vending machine today. Given the many choices and competing companies, there is little doubt soda’s price is controlled by supply-and-demand forces in a freely competitive market.
I also remember the 1958 price of a loaf of thin-sliced white sandwich bread: 25 cents. In today’s money that is near $1.93, a figure quite close to those in today’s grocery stores for the same kind of product.
Again, there are many competing companies and product choices. The price of bread is very clearly set by supply-and-demand forces in a freely-competitive market.
I also remember very clearly buying regular-grade gasoline for the lawnmower in 1958 for 25.9 cents per gallon. I carried the gas can to the local store on my bicycle, so I could mow the lawn for mom and dad. Inflation-corrected, that would correspond to $1.99 per gallon (for today’s unleaded regular).
OK, so call it $2.00/gallon. I just this morning filled up at 359.9 cents/gallon (essentially $3.60/gallon). Gasoline hasn’t been as low as $2.00 a gallon in a very long time, excepting one brief transient just as the economy and market crashed in late 2008 into early 2009. It’s high, and it’s been skyrocketing higher each day, for the last month.
The news reporters have been parroting press releases that blame it on “some refineries not being open”. I did hear the word “speculator” on the radio in that pricing context, this morning, finally. But no discussion of it.
There’s only a tiny handful of giant oil companies (4 giants and some small fry), all of which have been “on-board lock, stock, and barrel” with OPEC, ever since they noticed the truly enormous windfall profits to be made, during the original 1973 Arab oil embargo. How “competitive” is that?
There’s only one fuel (gasoline) to buy for a gasoline car. Likewise, there is only diesel to buy for a diesel car or truck. There’s no significant competing product we could use. How “competitive” is that?
Our demand is very inelastic: we still have to drive to work and to the grocery store, no matter what they charge for the fuel. We can’t cut back driving very much, so we cannot affect their prices enough to matter very much at all. How “competitive” is that?
I’m sorry, but oil products like gasoline (and the other engine fuels) are not priced by actors within anything resembling a freely-competitive market. The $3-4/gallon prices we have been paying for several years (when they should be $2) clearly show the noncompetitive nature of this market.
We are seeing speculator bubbles superposed upon OPEC punitive pricing (for “meddling” with our wars in their middle east affairs, affairs which include sending terrorists into our midst to kill us). Those are superposed in turn upon the basic supply-and-demand effects (which actually are there, but buried).
The $1.60 per gallon difference between the $3.60 per gallon price I paid this morning, and the $2.00 per gallon that it should be, goes to reward those who are raping us economically in a huge oligopoly organized over the decades specifically to do that.
“Oligopoly” is “monopoly”, just with more than one pirate at the top of the heap. Everybody else is an economic slave. Kinda shows, don’t it?
Myself, I like the freely-competitive market. It’s why bread and soda pop are not ruinously expensive the way vehicle fuels are.
Don’t you wish we had a freely-competitive market in fuels?
For those who are interested, I have written articles before about this, and multiple closely-related topics. These are listed below by date, title, and some indication of content. Some of these contain plots of inflation-corrected prices for gasoline, stretching back decades. Correlating those trends with then-current events can be very revealing. There is a by-date and by-title navigation on this site, at the left.
Date Title / how related?
9-25-12 On Economic Depressions and Public Policy
3-8-12 Iran, Oil, and Economies
latest price plots
2-4-11 Oil Prices, Recessions, and the War
earlier price plots
3-4-10 Addiction, Monopolies, and the Oil Price Weapon
earliest price plots
1-25-10 To Fight the War on Terror, We Really Need to Know Our Enemy