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(August, 2008 - revised April, 2012)

In 1970 (when I was 16 years old), I routinely purchased gas at 35 cents per gallon. Recently it's been hovering at about $4.00 per gallon.

That 42 year increase represents a compound annual growth of 5.97% in the price of a gallon of gas - roughly double the current rate of inflation. It feels so much worse because the steepest increases occurred so recently. When adjusted for inflation, however, today's $4.00 per gallon price is only 6.6% more than the price in 1918.

(Update 6/5/16 - last week's US average for unleaded was $2.281 per gallon. That represents an annual compound growth in the price of gasoline of only 4.16%. In fact, that 35 cents adjusted for inflation since 1970 would be worth $2.16 today.)

Data show that during the gas crunch of the 80's the average price for regular gasoline in the US peaked in March, 1981 at about $1.35 (that's a real price - not adjusted for inflation). From that peak, it dropped gradually, bottoming at about $0.76 per gallon in November, 1986.

That created a huge opportunity our country squandered. Why do I say that?

What if we had authorized, starting with the peak of $1.35, a tax increase of cent per gallon each time the average price of gas dropped by a full cent - and dedicated those monies to reducing our dependence on carbon-based fuels? By the time the price of gasoline had dropped to $0.76 in 1986, we would have been generating 29.5 cents for each gallon sold.

Let's figure out how much this small tax would have generated since 1986. 

  • From 1986 through 2011, about 536 billion gallons of gasoline were purchased in the United States. 
  • At 29.5 cents per gallon, that would have generated $158 billion. 

Remember - these are real dollars, not inflation adjusted. Adjusted for inflation, that tax revenue would have been more than $200 billion.

Now you may or may not be a fan of how well our federal government uses our tax dollars. But if we had used that $200 billion to fund private research on non-polluting, renewable, and safe alternatives to carbon-based fuels, do you think we might have cars today that pollute less and average 60 to 100 mpg - or even don't run on gasoline? Do you think we might be much less dependent on oil- and coal-based energy?

If technological improvements reduced our demand for oil, we might not even be looking at $4.00 per gallon prices today - especially if we had shared any newly discovered technologies with the developing nations of today. But even if it didn't prevent $4.00-per-gallon gasoline, we would be feeling much less pain from today's high prices, because we would have viable, cheap, and non-polluting options already in place.

Recall the tremendous technological breakthroughs we've accomplished when our government has committed to accomplishing something.

For example, consider the vast technological, social, industrial, and national defense benefits which came from the Manhattan Project and the Apollo space programs. Entire industries were created by these programs that even today continue to make scientific and technological contributions.

The Manhattan project cost about $2 billion ($24 billion in today's dollars), and the Apollo program cost about $25 billion in 1969 dollars (about $149 billion in today's dollars). Together these aren't even as much as would have been generated by the 29.5 cent tax.

Let's not squander the opportunity again. Starting with $4.00 per gallon, let's add cent tax every time the price of a gallon of gas drops by a penny, and commit those tax dollars to the development of non-carbon-based, non-polluting, safe, and renewable energy sources.


And many thanks to my brother, Samuel Metz, for his assistance in editing this essay.  You can visit his own web page here.

If you experience any problems with this page or have suggestions or comments, please contact me.

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