Small Cars vs Large
In the 1960's practically all Americans drove large cars (very large by today's standards). Trucks were few, and SUv's were rare. In the 1970's there was a mideast war. We ended up having our oil embargoed. The price of gas went from$0.25 per gallon to over $1 per gallon. People started buying tiny imports.
In the 1980's, under the superb fed guidance of Paul Volcker, the price of gasoline dropped. Americans developed an appetite for trucks and what is now called the SUV. The demand for gasoline increased and the price stayed low.
The 1990's saw us back to our old excesses. The number one sellers were gas guzzling SUV's and pickup trucks. A tipping point was reached around 2001.
The early 2000's saw gas prices quadruple, from $1 to $4 per gallon. Now there are other options besides small cars. There are 25 mpg SUV's. There are hybrids. There is much greater efficiency overall.
A normal price correction started in late 2008. Gasoline briefly reached a nadir of $1.40 per gallon until some ill advised activity by the federal reserve bank to devalue the dollar reversed the trend. Mr Bernanke drove the prce of gasoline back up.
Hence we will see a trend towards greater fuel efficiency in vehicles. Unfortunately people cannot afford to keep larger, safer, more comfortable automobiles again. So the pendulum shifts.
Inflation is the worst tax of all. It is anti-regressive in that it disproportionately affects the poor. A rich person could care less if gas is $4 per gallon. A person making minimum wage can not afford it. There is no meaningful public transit infrastructure here either. Great job, Bernanke. Food and fuel are vital and should be included in the inflation formula. Get your head out of the sand and stop pandering to the wall street and banking crooks.
