The Price of Fuel

The cost to fuel our cars has been fluctuating wildly and has recently been declining. The other day I noticed that Casey’s had it for $2.999  and I could purchase it the day before in Springfield for $2.689. I got to wondering how that price was compared to when I went off to college in 1963. I remember purchasing it for $.299 in Fayetteville. Wow, it is 10 times more now. If you think it is high you have not been to the West Coast Recently. A couple of weeks ago while in San Diego I paid $5.689. I got out the trusty spreadsheet and backed down that $3 price to 1963 adjusting for inflation. I was shocked as the calculation showed that $2.999 today has the same buying power as $.269 in 1963. So fuel is less costly today. It gets even better. I found a chart that shows the average MPG for all the cars in the USA. In 1963 it was 19 MPG and today it is 31. So our cost per mile (in terms of buying power) has decreased by about 45% when you factor in both inflation and increased efficiency.

Now for the bad news. I checked our ability to pay. I started by checking our economy’s performance over that period using GDP and adjusting it for inflation again. GDP increased by about 380%. Then I checked the median family income adjusted for inflation and found that it had only improved by 21% over 60 years. By comparison, the economy has boomed, but not our ability to pay. Any thoughts about where the 359% improvement in our economy went?