15 ms·

Gasoline Prices Adjusted for Inflation

17 points by lend000 5y ago

freediver 5y ago
Interesting fact: To be considered a millionare like when the term was coined (roughly 100 years ago) you would need to have about 26M in wealth today (inflation adjusted). https://www.usinflationcalculator.com https://www.usinflationcalculator.com
- Beaver117 5y ago
  Similarly, a "six figure salary" adjusted for inflation from 1980 now actually means over $300k
  - apatheticonion 5y ago
    What....
deleted 5y ago
[deleted]
tooltower 5y ago
Question: when calculating the CPI, what's the weight coefficient for gas prices? It isn't largely defined by the gas price, is it?
- CrazyStat 5y ago
  They're using a gasoline-specific CPI. So yes, it is. This is an entirely pointless exercise.
- deleted 5y ago
  [deleted]
Natsu 5y ago
The problem is that the graph here is going down because inflation is going way up :/
- eyelidlessness 5y ago
  I’m picturing a melting graph like a Dali painting and that doesn’t seem like a problem to me.
majormajor 5y ago
I don't understand what this is supposed to be showing. They seem to be only adjusting by a gas-specific CPI component: "1978 Gas Price x (2020 CPI for Gas / 1978 CPI for Gas) = Adjusted Gas Price in 2020 Dollars". Which seems like a tautology... The "X Year Gas Price" and "X Year CPI for Gas" seem so linked - if you adjust this number by a number that's supposed to reflect it's rate of change, you get a flat line, but... of course? For instance, the spike between 2003 and 2006 certainly didn't feel like a flat line compared to the cost of other things, so wouldn't this graph be much more interesting if it was based on "CPI for everything BUT gas"?
- CrazyStat 5y ago
  Next up: inflation-adjusted price of gold, adjusted against a gold price index.
  - number6 5y ago
    And one bitcoin is always one bitcoin. It's the dollar that's volatile!
hirundo 5y ago
If the cost of gas after inflation is as stable as that graph suggests, then most of the large increase in gas prices in the past year -- from ~$2 to ~$3 -- is the result of inflation. https://www.gasbuddy.com/charts https://www.gasbuddy.com/charts A near 50% annual inflation rate? I sure hope not. Someone please tell me what's wrong with this graph or my interpretation.
- CrazyStat 5y ago
  They're adjusting gasoline prices by a gasoline-specific index as their "inflation estimate". Basically dividing one average gasoline price by a slightly different average gasoline price. Unsurprisingly this results in a flat line.
- dragonwriter 5y ago
  > If the cost of gas after inflation is as stable as that graph suggests They are actually adjusting retail price of gas for the CPI component for gasoline. Which is a dumb thing to do: by definition that should be completely invariant, but it doesn't tell you anything except how well aligned the gas price average they are using is with thr one the BLS uses to calculate the CPI component for gasoline. For which the answer is “close, but not perfect”.
anti-nazi 5y ago
and not the only thing the nazis need to adjust, like their fucking genocidal issues
eyelidlessness 5y ago
If the goal of excluding gas from the inflation analysis is to eliminate its volatile pricing, understanding its relationship to inflation should use the same exclusion to calculate inflation, and a moving average could smooth the volatility for a clearer trend line. The methodology used here essentially provides no meaningful information as the chart clearly shows. The only way that visualization is accurate is if the huge spike in average gas prices coincided with a huge spike in general inflation measures (it didn’t) or a huge reduction in gas expenses as a proportion of spending (which didn’t occur).
lend000 5y ago
The calculation for CPI is not publicly available, but it has been believed for some time that gasoline is a huge part of the index. The interesting part is the relative flatlining of gasoline in unadjusted dollars since 2004 (for many logical reasons), and how the BLS could use that to their advantage to publish a lower CPI.
- CrazyStat 5y ago
  > The calculation for CPI is not publicly available, but it has been believed for some time that gasoline is a huge part of the index. The BLS publishes the weights for the CPI calculations every year (see e.g. [1]). There's no need to speculate about it. Gasoline is about 3% of the index. [1] https://www.bls.gov/cpi/tables/relative-importance/2019.pdf https://www.bls.gov/cpi/tables/relative-importance/2019.pdf
  - lend000 5y ago
    Fascinating! I didn't know these weights were published. If you look at the data from 2005 to 2019, you can see substantial, seemingly arbitrary weight changes in gasoline (and other items) to come up with a stable CPI number. For example, 2.9% in 2003 to 5.2% in 2007 and back down to 3% with plenty of bumps. Legitimately curious: can you think of a reasonable justification for 60% weight fluctuations of a major element of the index? Recreation is another weight on the list that seems to fluctuate back and forth without any noticeable trend except to smooth out the numbers. And, from what I've read, the actual data used to multiply against these weights is not public [0]. For average gasoline prices, there isn't much manipulation they can do short of blatant fraud. But for something like recreation, photography, etc.... Well. [0] https://www.forbes.com/sites/perianneboring/2014/02/03/if-you-want-to-know-the-real-rate-of-inflation-dont-bother-with-the-cpi/?sh=2b5e6e91200b https://www.forbes.com/sites/perianneboring/2014/02/03/if-yo...
    - CrazyStat 5y ago
      > to come up with a stable CPI number You're imputing motive here without any evidence. > Legitimately curious: can you think of a reasonable justification for 60% weight fluctuations of a major element of the index? Yes. The weights are determined from survey data (Consumer Expenditure Survey, conducted by the census bureau). They aren't just made up. As for why gasoline jumped from a weight of 2.9 in 2003 to 5.2 in 2007, probably because the price of gas doubled over that period and so it was a larger proportion of survey respondents' budgets, which results in a higher CPI weight. > Recreation is another weight on the list that seems to fluctuate back and forth without any noticeable trend except to smooth out the numbers. Again imputing motive without evidence. Disposable income expenditures like recreation and photography naturally are highly responsive to economic conditions. When the economy is good people spend more on recreation. When the economy is bad they spend less on recreation. As the percentage of survey respondents' budgets that gets spent on recreation changes, so does the CPI weight. Nothing strange about that. CPI naturally will be smoother than tracking individual items because of (1) random variations averaging out in the large basket of goods and (2) consumers adjusting purchasing behaviors in reaction to prices. There's no need to appeal to conspiracy theories about the BLS intentionally smoothing it by manipulating data.
antattack 5y ago
In 1978 I could get 0.4gallon of milk and 4.8 first class stamps for the price of one gallon of gas (0.63) I can get 1.4gallons of milk and 5.5 stamp for the price of one gallon of gas (3.04). In summary, gasoline is more expensive now then it was in 1978 and does not match the graph.
mgarfias 5y ago
All this really says is that there has been a ton of devaluation happening to the US dollar.
- eyelidlessness 5y ago
  Go on...
  - mgarfias 5y ago
    The graph says it all. There haven’t been any technological changes in oil refining to make gas change in value. That it costs more per gallon in raw dollar terms means that the value of the dollar relative to the value of a gallon of gas has dropped massively. Even more if you figure that today’s cars are pretty damned efficient and use way less gas than a car from the 70s, so we extract more value from a gallon of gas in terms of work performed.
Dah00n 5y ago
No wonder Americans drive old gas-guzzler planet destroying trucks with those prices. A US gallon of fuel costs US$7 in Denmark. Which is A Good Thing for the environment. Only very environmental conscious people would buy a non gas-guzzler with those prices (which is also exactly what the numbers show on sold cars).

17 points by lend000 5y ago

Interesting fact: To be considered a millionare like when the term was coined (roughly 100 years ago) you would need to have about 26M in wealth today (inflation adjusted). https://www.usinflationcalculator.com https://www.usinflationcalculator.com

Beaver117 5y ago
Similarly, a "six figure salary" adjusted for inflation from 1980 now actually means over $300k
- apatheticonion 5y ago
  What....

deleted 5y ago

[deleted]

tooltower 5y ago

Question: when calculating the CPI, what's the weight coefficient for gas prices? It isn't largely defined by the gas price, is it?

CrazyStat 5y ago
They're using a gasoline-specific CPI. So yes, it is. This is an entirely pointless exercise.
deleted 5y ago
[deleted]

Natsu 5y ago

The problem is that the graph here is going down because inflation is going way up :/

eyelidlessness 5y ago
I’m picturing a melting graph like a Dali painting and that doesn’t seem like a problem to me.

majormajor 5y ago

I don't understand what this is supposed to be showing. They seem to be only adjusting by a gas-specific CPI component: "1978 Gas Price x (2020 CPI for Gas / 1978 CPI for Gas) = Adjusted Gas Price in 2020 Dollars". Which seems like a tautology... The "X Year Gas Price" and "X Year CPI for Gas" seem so linked - if you adjust this number by a number that's supposed to reflect it's rate of change, you get a flat line, but... of course? For instance, the spike between 2003 and 2006 certainly didn't feel like a flat line compared to the cost of other things, so wouldn't this graph be much more interesting if it was based on "CPI for everything BUT gas"?

CrazyStat 5y ago
Next up: inflation-adjusted price of gold, adjusted against a gold price index.
- number6 5y ago
  And one bitcoin is always one bitcoin. It's the dollar that's volatile!

hirundo 5y ago

If the cost of gas after inflation is as stable as that graph suggests, then most of the large increase in gas prices in the past year -- from ~$2 to ~$3 -- is the result of inflation. https://www.gasbuddy.com/charts https://www.gasbuddy.com/charts A near 50% annual inflation rate? I sure hope not. Someone please tell me what's wrong with this graph or my interpretation.

CrazyStat 5y ago
They're adjusting gasoline prices by a gasoline-specific index as their "inflation estimate". Basically dividing one average gasoline price by a slightly different average gasoline price. Unsurprisingly this results in a flat line.
dragonwriter 5y ago
> If the cost of gas after inflation is as stable as that graph suggests They are actually adjusting retail price of gas for the CPI component for gasoline. Which is a dumb thing to do: by definition that should be completely invariant, but it doesn't tell you anything except how well aligned the gas price average they are using is with thr one the BLS uses to calculate the CPI component for gasoline. For which the answer is “close, but not perfect”.

anti-nazi 5y ago

and not the only thing the nazis need to adjust, like their fucking genocidal issues

eyelidlessness 5y ago

If the goal of excluding gas from the inflation analysis is to eliminate its volatile pricing, understanding its relationship to inflation should use the same exclusion to calculate inflation, and a moving average could smooth the volatility for a clearer trend line. The methodology used here essentially provides no meaningful information as the chart clearly shows. The only way that visualization is accurate is if the huge spike in average gas prices coincided with a huge spike in general inflation measures (it didn’t) or a huge reduction in gas expenses as a proportion of spending (which didn’t occur).

lend000 5y ago

The calculation for CPI is not publicly available, but it has been believed for some time that gasoline is a huge part of the index. The interesting part is the relative flatlining of gasoline in unadjusted dollars since 2004 (for many logical reasons), and how the BLS could use that to their advantage to publish a lower CPI.

CrazyStat 5y ago
> The calculation for CPI is not publicly available, but it has been believed for some time that gasoline is a huge part of the index. The BLS publishes the weights for the CPI calculations every year (see e.g. [1]). There's no need to speculate about it. Gasoline is about 3% of the index. [1] https://www.bls.gov/cpi/tables/relative-importance/2019.pdf https://www.bls.gov/cpi/tables/relative-importance/2019.pdf
- lend000 5y ago
  Fascinating! I didn't know these weights were published. If you look at the data from 2005 to 2019, you can see substantial, seemingly arbitrary weight changes in gasoline (and other items) to come up with a stable CPI number. For example, 2.9% in 2003 to 5.2% in 2007 and back down to 3% with plenty of bumps. Legitimately curious: can you think of a reasonable justification for 60% weight fluctuations of a major element of the index? Recreation is another weight on the list that seems to fluctuate back and forth without any noticeable trend except to smooth out the numbers. And, from what I've read, the actual data used to multiply against these weights is not public [0]. For average gasoline prices, there isn't much manipulation they can do short of blatant fraud. But for something like recreation, photography, etc.... Well. [0] https://www.forbes.com/sites/perianneboring/2014/02/03/if-you-want-to-know-the-real-rate-of-inflation-dont-bother-with-the-cpi/?sh=2b5e6e91200b https://www.forbes.com/sites/perianneboring/2014/02/03/if-yo...
  - CrazyStat 5y ago
    > to come up with a stable CPI number You're imputing motive here without any evidence. > Legitimately curious: can you think of a reasonable justification for 60% weight fluctuations of a major element of the index? Yes. The weights are determined from survey data (Consumer Expenditure Survey, conducted by the census bureau). They aren't just made up. As for why gasoline jumped from a weight of 2.9 in 2003 to 5.2 in 2007, probably because the price of gas doubled over that period and so it was a larger proportion of survey respondents' budgets, which results in a higher CPI weight. > Recreation is another weight on the list that seems to fluctuate back and forth without any noticeable trend except to smooth out the numbers. Again imputing motive without evidence. Disposable income expenditures like recreation and photography naturally are highly responsive to economic conditions. When the economy is good people spend more on recreation. When the economy is bad they spend less on recreation. As the percentage of survey respondents' budgets that gets spent on recreation changes, so does the CPI weight. Nothing strange about that. CPI naturally will be smoother than tracking individual items because of (1) random variations averaging out in the large basket of goods and (2) consumers adjusting purchasing behaviors in reaction to prices. There's no need to appeal to conspiracy theories about the BLS intentionally smoothing it by manipulating data.

antattack 5y ago

In 1978 I could get 0.4gallon of milk and 4.8 first class stamps for the price of one gallon of gas (0.63) I can get 1.4gallons of milk and 5.5 stamp for the price of one gallon of gas (3.04). In summary, gasoline is more expensive now then it was in 1978 and does not match the graph.

mgarfias 5y ago

All this really says is that there has been a ton of devaluation happening to the US dollar.

eyelidlessness 5y ago
Go on...
- mgarfias 5y ago
  The graph says it all. There haven’t been any technological changes in oil refining to make gas change in value. That it costs more per gallon in raw dollar terms means that the value of the dollar relative to the value of a gallon of gas has dropped massively. Even more if you figure that today’s cars are pretty damned efficient and use way less gas than a car from the 70s, so we extract more value from a gallon of gas in terms of work performed.

Dah00n 5y ago

No wonder Americans drive old gas-guzzler planet destroying trucks with those prices. A US gallon of fuel costs US$7 in Denmark. Which is A Good Thing for the environment. Only very environmental conscious people would buy a non gas-guzzler with those prices (which is also exactly what the numbers show on sold cars).