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Old 05-31-2008, 12:29 PM   #1
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Thoughts on the Tundra vs: Tacoma thread

I didnít want to hijack the other thread with these thoughts so I decided to start a different one. The subject of fuel prices comes up all over the place and usually generates a fair amount of discussion. Anyway, one advantage of having gotten old enough to have been able to pay cash for my Tacoma is the blessing of historical perspective (Especially when you consider that my first hourly job paid $0.65 per hour.)

I pulled the following from U.S. Government sites on the U.S. economy through 2007, specifically as it pertains to gas prices.

Look at relative cost to an unskilled worker to fill up using 1949 dollars. That year the 27 cents it cost for a gallon of gas, took a certain share of the worker's wage. The interesting question is, has the cost as a share or percent of the worker's wage increased or decreased over time? For the wage rate and price of gasoline in other years, this cost has fallen. Since wages have increased faster than the price of gasoline, by 2007 an unskilled worker spends only two-thirds as much, as a percent of wage, for a gallon of gasoline than the 1949 worker. The $2.85 a worker paid in 2007 would be comparable to only 20 cents (in 1949 prices "share" of the wage.

When we use the GDP per capita, the cost has fallen faster. A gallon of gasoline costs around 11 cents a gallon (in 1949 prices) if measured as a "share" of the GDP per capita. This is because in 1949, 27 cents was .015% of per capita GDP, while in 2007, $2.85 was .006%.

Finally, comparing its cost as a share of GDP, we see that in 1949 prices, it is about 6 cents. This means that a gallon gasoline was a four and a half times larger share of output in 1949 than it is today.
(ďTodayĒ refering to $2.85).

Since I have the habit of viewing money as an exchange medium for trading my labor for others' goods and services, Iím happy that prices have continued to go down troughout my lifetime. While I love it when I can buy fuel at low prices, Iím still paying less (in percentage of my labor) than I was 45 years ago. We all like to gripe about things like fuel prices but it's pretty hard to find data to validate the gripes.
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Old 05-31-2008, 05:47 PM   #2
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^That is a very interesting perspective and one I hadn't realized until now. You may have noticed my comments on the current fuel situation on the forums here in defense of capitalism and how current prices are the result of speculation but this only further convinces me that people are jumping the gun here.

The fact is, we have been lucky to this point. Consider that I paid $.77/gal in 1998 and factor that in to your comments. What were we paying in the 1949 equivalent then? $.03? Certainly puts things in perspective.

The fact is, many many other products have gone up at higher percentage over time than gasoline but people don't think about that. It's all a matter of perspective but I think it's funny when I hear someone whine about gas prices while they have a big screen TV, cell phone, V8 SUV, and other toys. It's as though they feel they are entitled to cheap gas or something. I tell them "Welcome to the free market economy."
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Old 05-31-2008, 06:21 PM   #3
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I appreciate the data that you have shared. Whats killing everyone is that gas has gone up 20% in a couple months for the second time in 2 years. If they eased it up slowly over time I would have no problem. But to CRASH us up to the present prices hurts and upsets a lot of people. They will be giving SUVs and Trucks away by $4.00. They are almost doing that now. JMO.
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Old 05-31-2008, 06:29 PM   #4
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Wilson you always have excellant points. I'd like to add though that little thing about how regular folks have to move far out of the area to afford a home to make a family (speaking of my area here) and have that life...and the fuel prices are kind of getting to be a real burden on the budget. You see what they are charging for diesel? What about the delivery of goods-the independant trucker? Free market is good but greed tips the scales in the wrong direction.
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Old 05-31-2008, 07:07 PM   #5
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^I agree, it is hard. I paid $68.50 to fill up today (3.74/gal) and, yes, it certainly is a burden. I have a child on the way and I am hoping these prices ease by the time she's born (Oct 20 due date) so, yeah, I'm thinking about this too. The "experts" are saying they expect this to happen by the end of the year and, looking at history, when prices on a particular product get too high, usage slows which makes prices go down. Locally, I'm hoping this is about to happen because prices are unchanged for the last week and a half (gas stations in my area have been at $3.78 for that long). There obviously is no shortage because I haven't heard of one place in this country that has a gas shortage so that means the supply is there.

These things are cyclical and when prices get out of hand, the bottom drops out just like the dot.com bust and the housing market. Things will get better, no doubt about it.

One theory I have (it's a guess really, lol) is that prices will follow the 70's/80's. In other words, prices started going up in 1973 and then leveled off in 1981. Prices this time started up in 2001 so we're 7 years into my HOPED for 8 year cycle. Between 1981 and 1984, oil prices dropped about $30/barrel so, who knows, maybe that will happen here.

Hey, I'm a "glass is half full" type of guy so I don't let this stuff get me down. I adjust my finances accordingly and do the best I can.
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Old 05-31-2008, 07:29 PM   #6
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Congratulations Poppa Wilson
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Old 05-31-2008, 07:39 PM   #7
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My 05 Double Cab Tundra Lease came up last month. I could have had a new Tundra for a $1000 Less than my Tacoma.

The biggest factor was the overall size, followed by fuel consumption.

My Tacoma was the best choice I could have made.
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Old 05-31-2008, 07:51 PM   #8
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Quote:
Originally Posted by WilsonTheDog View Post
^The fact is, we have been lucky to this point. Consider that I paid $.77/gal in 1998 and factor that in to your comments. What were we paying in the 1949 equivalent then? $.03? Certainly puts things in perspective. "
If I'm reading the tables correctly (No absolute guarantee of that) the nominal price of gasoline in 1998 was $1.06 which would be the same as paying $0.11 per gallon in 1949, considerably less than half the price that year of $0.27. That should make your price of $0.77 equal to about $0.08 in 1949. Any way you figure this it comes out that we would be paying between $9 & $12 per gallon if gasoline had inflated at the same rate as income. I'm glad to be living in this time and place. Granted, fuel price increases hurt but we're all free to make lifestyle changes to accommodate, if necessary.

If you're interested, the source I settled on using for this exercise can be found at:
http://www.measuringworth.com/uscompare/#
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Old 06-01-2008, 07:10 AM   #9
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The fundamental reasons for the rise in gasoline prices bear repeating from my previous post.

Limited supply in the ground, limited refining capacity, and limited willingness to drill for new oil. On the other side; increasing demand here in the US and the emergence of China and India, with their massive populations, as global consumers of energy.

Oil speculation has at best a short term temporary influence on prices. The 70’s have no influence on prices. You can come up with any pet theories you want but the fundamental trend observes realities only.

The government statistics comparing gas prices from the 40’s to the present day are of academic interest only. These statistics would provide no comfort to some family struggling financially because of gas prices.

So you want to save the planet. It’s simple. In order; have no more than two kids, drive a smaller more fuel efficient car or truck, and live in a smaller more energy efficient house.
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Old 06-01-2008, 07:59 AM   #10
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Quote:
Originally Posted by CometKat View Post
Oil speculation has at best a short term temporary influence on prices.
How do you figure this? Seems to me that anytime there is a forseeable problem with some country, or other potential problem/catastrophy, Oil prices rapidly climb and not come back down. Then, within a week, Fuel prices climb to suit. The way I understand it:
"There are two things off the top of my head. The first one - and this is what my dissertation is about - is that, in fact, it is expectation that drives up prices.

A good example would be that (investors) realized that in late 2002 that the United States was going to be invading Iraq, and it was not clear on the battlefield that things would go so well for the United States. For ... somebody who buys and sells these futures contracts on, say, the New York Mercantile Exchange, (he) start(s) buying futures contracts and that pushes the price up today.
So people have expectations that the price will be high in the future. That drives up prices today. It may not have anything to do with the scarcity of oil currently. So that helps us to understand the sharp fluctuation in oil price. If you look at the oil futures prices, they jump up and they jump down."
http://blog.mlive.com/annarbornews/2...nd_gas_pr.html

I dont want to sound like Im challenging, Im just courious.
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Old 06-01-2008, 08:16 AM   #11
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Quote:
Originally Posted by chris4x4 View Post
How do you figure this?
The point is simply that the macro-economic trend of the US, China and Indiaís increasing demand far outweighs the influence of a few thousand oil speculators. So yes the speculators cause a pop in prices based on expectations. But the prices stay high because of the economic realities of supply and demand.
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Old 06-01-2008, 08:23 AM   #12
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Quote:
Originally Posted by CometKat View Post
The point is simply that the macro-economic trend of the US, China and India’s increasing demand far outweighs the influence of a few thousand oil speculators. So yes the speculators cause a pop in prices based on expectations. But the prices stay high because of the economic realities of supply and demand.
Ok. I see your point. Not sure if I agree 100%, but I understand where you are comming from.
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Old 06-01-2008, 08:29 AM   #13
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Quote:
Originally Posted by CometKat View Post
The government statistics comparing gas prices from the 40ís to the present day are of academic interest only. These statistics would provide no comfort to some family struggling financially because of gas prices.
What's academic (at best) is ignoring historic perspective in order to justify whining about one's inability to appropriately discipline lifestyle priorities. Of course I come from a pro-capitalistic, free market position. A more leftist attitude is that all problems are caused by someone else and that the whining individual is a victim. In 1949 my dad was a finish carpenter/cabinet maker so I assume we were middle class. We (a family of five) lived in a 2 bedroom, 800 square foot house and my dad drove 1 1/2 miles to work. "Rich" people in our town lived in HUGE houses, 2000 - 2500 square feet. Look at your lifestyle, the size of your house, the cars you drive (and how far you drive them), the toys you own, the debt you've chosen to shoulder to have it all, and explain to me again why fuel prices are at fault for your "struggling".
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Old 06-01-2008, 08:42 AM   #14
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Quote:
Originally Posted by gpspowell View Post
"struggling".
The struggling family I was referring to was purely hypothetical not personal. I completely agree with your points.
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Old 06-01-2008, 08:48 AM   #15
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Once again I reiterate my point that in urban areas across America home prices have inflated to the point where in order to fulfill "the American dream" you have to buy homes further out of the area that arent close to work centers. Am I reading you to say EVERYBODY must live within 5 miles of their workplace? NOT a possibility! What say you?
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Old 06-01-2008, 08:48 AM   #16
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Quote:
Originally Posted by CometKat View Post
The struggling family I was referring to was purely hypothetical not personal. I completely agree with your points.
Sorry. It's early and I haven't finished my coffee.
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Old 06-01-2008, 08:50 AM   #17
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Good stuff!
Lifestyle and our need for mobility today is vastly different from 1949. In 1949 our family pickup was a 93 hp chevy (good mileage?) and was used only for work. Our car was in the same class and Mom didn't even have a drivers license. No suburban malls to visit on all day shopping trips. A trip "up north" to the lake took all day to travel 200 miles and was a once in a summer event. Today, we've become accustom to doing that same trip on a whim on a frequent basis.

It's all relative I guess, we've become a spoiled society dependent on greater mobility and less efficient autos.

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Old 06-01-2008, 08:58 AM   #18
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I suppose I should back up my last post with a simple Bay Area example; our 1840 square ft 4 bedroom 2 bath home here in the Sunset San Francisco-$995,000. Tracy, Ca. which is 75 miles east, 1700 square ft 4 bedroom 2 bath NEW built in '98 with a yard twice our size $270,000! by the way the inflated prices around S.F. cover a 40-50 mile area!
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Old 06-01-2008, 09:10 AM   #19
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Quote:
Originally Posted by Ridgerunner View Post
Once again I reiterate my point that in urban areas across America home prices have inflated to the point where in order to fulfill "the American dream" you have to buy homes further out of the area that arent close to work centers.
Living "the American dream" and the individual interpretation of it is my point. How about living the "American reality". Affordable urban housing that is close to "work centers" isn't unavailable, it's just that much of it is in neighborhoods that aren't seen as desirable. That "undesirability" is (at least) in part due to the flight of workers to suburbs in search of the "American dream".

Quote:
Am I reading you to say EVERYBODY must live within 5 miles of their workplace? NOT a possibility! What say you?
Nope. But it would alleviate many of the issues, wouldn't it?

Anyway, now I'm helping to derail this thread into a thread on social issues. My original point was that inflation over my lifetime has taken place across the board and to single out fuel price as the main reason people are struggling with financing their lifestyles is unreasonable.
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Old 06-01-2008, 09:20 AM   #20
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HAH yeah undesirable! I'd rather live out yonder than with a cockroach named joe
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