It is impossible to pick up
a newspaper and not see the price of a gallon of gas mentioned somewhere. 

In the summer of 2008, it is foremost on everybody’s mind. According
to Myron Gushlak, a Canadian investment banker, people may be over-reacting to
the price of gas in the United States. If we assume, for the sake of argument,
that gas cost $1 a gallon in 1975, it may surprise you to know that it costs
about the same today in actual spending power taking into consideration the
cost of living increases over the past thirty-three years.  If you use the “value consumer bundle?
which is the average expenditure of consumer units, (a number the federal
government bandies about) a dollar in 1975 is equivalent to $4.58 today. This
is a modest estimate. Myron further points out that if you use the federal
government’s Gross Domestic Product (GDP) index per capita, a dollar in 1975 is
equal to $6.04 today.  That number
makes gasoline cheaper today than in ?75 .

            Mr.
Gushlak was not trying to minimize the impact of the meteoric rise in the past
six months.  That impact is just
now starting to trickle down through the economy. But a little perspective may
serve as a sweetener in a very bitter cup of coffee.

            I’m
sure you’ve seen those lists on the internet of the relative price of other
liquids. A gallon of lowfat milk costs $3.79. A Gallon of Carlo Rossi Blush
wine costs $5.65. Evian spring water $6.40. Budweiser beer $8.88. Red Bull
energy drink, $30.69 a gallon. Gas doesn’t seem so outrageous by comparison,
especially if you deduct local and federal taxes. Be grateful that if your car engine
sputters , it does not need Robutussin DM to get it to move down the road.
Robutussin comes in at $109.76 a gallon. 

About the author

Myron Gushlak is a Canadian-born investment banker with over 14 years experience in Investment Banking.

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