Friday, January 2, 2015

Supply Side

I have a distinct memory of sitting in the back seat of our station wagon watching the little plates on the gas pump fall one after the other as my mom filled up the tank. It was 1974 and the Energy Crisis was in full swing. The price per gallon of gasoline in our New jersey town had recently topped fifty cents. At twelve years old, that seemed like an impossible amount to me; I remember shaking my head and thinking that a whole dollar would barely buy 2 gallons.

If that was one of my earliest economic recollections, six years later I got another lesson when I stayed with a friend and her family for a few days in Italy. In Europe, gas was three times as much as it was in the states, but I had flown there from our home in Saudi Arabia, and when her dad asked me about the price of gas in the Kingdom, I laughed when I told him it was about 28 cents a gallon. His outrage surprised me. "Everyone should be paying more for a commodity in such short supply," he fumed. "It should be a free market."

Today I feel lucky to be a person who rarely drives over 5 miles a day; I can go over two weeks without filling the tank. I'm also fortunate to be able to pay for gas whenever I want to take a longer trip, even when it's over four dollars a gallon like it was in 2008. And I understand that the price of a gas is a function of many things: economic, environmental, and political.

Even so, this morning when I filled my tank for less than 35 dollars? I did a little happy dance.

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