Gas Is So Cheap You Could Drink It (But Don’t) – Real Time Economics

The national average price for a gallon of regular gasoline fell below $2 on Monday for the first time since 2009, AAA said.
JOE RAEDLE/GETTY IMAGES

The decline in fuel costs over the past year returned gasoline prices to their rightful place: cheaper than a gallon of milk.

The national average price for a gallon of regular gasoline fell below $2 on Monday for the first time since 2009, AAA said. In several states, the average price was below $1.80 a gallon.

While shoppers are finding gasoline for less than $2 a gallon this holiday season, they would be unlikely to find a quickie mart selling milk for less than $3 a gallon.

(Not that we’d encourage you to put petrol on your Cheerios tomorrow.)

The average price for a gallon of whole milk in the U.S. last month was $3.30, according to the Labor Department. A gallon of regular gasoline cost $2.19, a price that has fallen further in recent weeks. In the past 20 years, the time the government has tracked specific, noninflation-adjusted prices for each product, milk has almost always cost more than gasoline.

That changed briefly when gasoline prices topped $4 a gallon in the middle of the last decade. The jump was reversed during the recession. But through most of the current expansion, the two must-have suburban liquids traded the lead back and forth, until fuel prices plunged late last year.

Thanks to giant signs displaying the price everywhere one drives, many Americans can quickly tell you the cost for a gallon of gasoline. They’d be more challenged to produce accurate prices for even common grocery goods, and likely have no idea that gasoline is cheaper than nearly any other liquid they buy.

In very unscientific survey, the only consumer liquid that consistently cost less per ounce than gas is water. Sold in a 24-pack at Target, bottled water costs just less than 1 cent an ounce. Grocery stores sell gallon jugs of drinking water for about a dollar.

At $2 a gallon, gasoline cost 1.6 cents an ounce. Milk costs about 2.6 cents an ounce.  A 99-cent, two-liter of Coca-Cola costs about 1.5 cents an ounce. Other “essentials” cost much more.

A Starbucks cup of coffee runs about 14 cents an ounce.

And you’d be hard-pressed to find a drinkable beer at less than 10 cents an ounce.

If you like those fancy microbrews, such as Rogue Dead Guy Ale, you’ll pay twice that price. Drink something a little harder? The big jug of Absolut Vodka will run 45 cents an ounce, purchased at retailer BevMo! Other spirits can easily cost a $1 or more for a 1-ounce shot.

But who is worried about those prices when gas is so cheap?

Corrections & Amplifications

Absolut Vodka was misspelled and the price of Coca-Cola per ounce was incorrect in a previous version of this article. (Dec. 21, 2015)

Related reading:

Gas Windfall Fails to Stoke Consumers

Cheap Oil Gives Little Help to U.S. Spending

Lower Gas Prices Yield Uneven Benefits

Gas-Price Drop Takes Americans’ Interest in Fuel Economy Down With It

Economic Growth Migrates Toward the Coasts

 


 


for economic news and analysis

for central banking news and analysis


Get WSJ economic analysis delivered to your inbox:


Sign up for the Real Time Economics daily summary

If the article suppose to have a video or a photo gallery and it does not appear on your screen, please Click Here

21 December 2015 | 3:16 pm – Source: blogs.wsj.com

[ad_2]

Leave a Reply

Your email address will not be published.