Gas Prices – Then and Now

Gas Prices “lower” than they were back nine years ago

Below is a photo “time capsule” of gas prices over at the Jersey City Exxon today – versus exactly nine years ago (2006 for the math-challenged).

Regular gas was $2.75 per gallon then compared to $2.30 today (I hate that “9/10th of a cent” bullshit). So what difference does $0.45 per gallon really mean? Is it really lower today or just an illusion?

NJ Gas Prices 2006 to 2015 Hoboken Jersey City Exxon

Your dollar today is worth less than yesterday!

You’ve all heard about the “Consumer Price Index” (CPI), right? It’s some “science” that sort of tries to depict what a dollar is worth in terms of how much “goods and services” it can buy. It’s a very loose formula that can be argued that it’s inaccurate one way or another. But for sake of argument – let’s compare the gas prices back then to today.

According to the “formula:”

If gas prices were constant – Gas in 2015 ($2.30) would have cost $1.98 in 2006.

But gas was much higher in 2006 ($2.75), which would have cost $3.20 in today’s dollars. So is it really $0.90 less per gallon?

Well, not really – because 90 cents today – would have bought a $1.05 worth of stuff back in 2006. Or in other words, the stupid CPI index says that 90 cents back in 2006 only buys 77 cents worth of stuff now. Isn’t that confusing? See how people can twist figures around? The bottom line is that it’s $0.45 less today, which is the equivalent of $0.39 in 2006 dollars.

In the end that is all “fuzzy math” because the cost of many of our “staple” goods have gone up double and triple (along with products shrinking in size).

And is anyone thinking about why the falling prices of gas seems to have bottomed out and remained around this price for a month or two, even with crude oil still heading lower?

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