Gas Prices: Coincidentally, I was thinking about this over the weekend, in response to one of the many stories on "record gasoline prices." Gregg Easterbrook takes down that misinformed boilerplate in his TNR blog.

Last week the national average for regular unleaded was $1.71, while "the record," USA Today declared, was $1.74 in August 2003. But all that matters to consumers is inflation-adjusted cost, and in this real-dollar calculation, gasoline prices remain about where they have been for most of the postwar era . . . The current gas-price level that Spencer Abraham, Dan Rather, and others are hyping as close to "the record" is actually 39 percent lower than the true price peak.

Perhaps this is why I remain pretty sanguine about fuel costs, despite a commute that amounts to over 600 miles per week. I don't think the cost I pay for gasoline is disproportionate to its value to me. At any rate, failure to adjust for inflation is a rookie mistake that Easterbrook is right to call out. On the other hand, none of this excuses the machinations of OPEC or the technological (and cultural) backwardness of numerous oil-exporting nations. If any reasonably stable, generally free-trading Western nation had the kind of oil reserves of a Saudi Arabia or Venezuela, gasoline would be about $1.00 per gallon -- most of it taxes. (I'm betting that any serious reduction in the price of petro-products would be partially offset by rising taxes, on the theory that the market can bear it.)

That brings up a final point. When discussing the "record" price for gasoline, one can't ignore the tax burden. I don't have the figures, but I don't suppose the taxes on gasoline were higher in the 1950s or 60s, were they? The better comparison (lacking the tax data, which I am too lazy to find right now) would be inflation-adjusted prices of crude (here, indexed to 2000), which still ignores technological advances, but bypasses the taxes built in at the pump.