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Tuesday, October 29, 2019

On a three-week road trip, and the price of gas

I just spent three weeks on vacation, and drove 4,100 miles round-trip from Austin, TX to Traverse City, MI, with side trips to Ann Arbor and Petoskey.

Petoskey, Michigan
I drove through Texas, Oklahoma, Missouri, Illinois, Indiana and Michigan. As the trip progressed, I paid increasingly higher prices for gasoline, from about $2.15 in Texas and Oklahoma, to $2.50 in Illinois, and $2.60 to $2.75 in Michigan.

There are three factors that drive the price of gasoline at the pump: The price of oil, the amount of taxes per gallon, and the distance from refineries.

As you'd expect, Texas and Oklahoma have lower gas taxes (by as much as 50%) and are much closer to refineries, driving down the cost of transportation.

What I find interesting -- though everyone likes to complain about the high price of gasoline at the pump -- is that gas is not that expensive, if you factor in inflation. In 1968, while I was in high school, I could buy gas for 30 cents a gallon. If you factor in inflation, that is $2.21 per gallon in today's dollars. See Inflation Calculator.


Some more information on gas prices and energy markets:

IEA Cuts Crude Demand Growth Forecast as Supply Continues Outpacing Demand
Pump Prices are a Treat for Majority of Motorists

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