Why is Gasoline So Cheap? A Cost Comparison of 40 Common Household Liquids
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How much is gasoline where you are? One day at lunch my coworkers complained about how expensive gasoline is right now, and I asked one of them if he knew that one gallon of milk is more expensive than a gallon of gas. He looked at me blankly and said, "really?" Then another coworker who used to live in London chimed in and said, "yeah Americans have the cheapest petro I have ever seen. In London it is probably about $8 a gallon."
After this conversation I set out to find out how cheap gas really is compared to other liquids I have used and consumed. I went around my house and office and made a list of common fluid substances and here are the results:
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These prices were taken from the local Safeway and the cheapest gas station down the street. Since I live in San Mateo, California these prices are a bit above the national average. The way I calculated the prices of things that are not sold in gallons is to take the price per ounce and multiply it by 128 since there are 128 fluid ounces in a gallon. This table shows that gasoline is one of the cheapest liquid products we buy.
This is quite puzzling to me because we require a lot less Krazy Glue than gasoline on a daily basis, and yet gasoline is several magnitudes cheaper than glue. However, because we consume so much gasoline we feel the pinch more on a day to day basis and we complain about it. The price of petroleum also contributes to higher grocery prices because everything needs to be transported around the country. Nevertheless, gasoline is ridiculously cheap in America, and perhaps that is why we do not have very good public transit systems compared to Europe.
Another thing I noticed is how expensive sodas and other packaged drinks are. I do get most of my drinks free at work , but the most frugal thing to do is to just drink tap and save the money for gas! Anyway, I challenge you to make a comparison chart of your own, and then you may not feel so bad about the price of gasoline.
Tagged: Personal Finance, Frugal Living, Cars and Transportation, Food and Drink, General Tips, Health and Beauty, Shopping, cheap, gasoline, groceries, shopping, soda
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Sorry, but the comparison is not helpful. You mentioned the key reason. Because of manufacturing and transportation costs, an increase in the price of gasoline will increase the price of every other liquid mentioned on your list. A price increase of any other liquid on your list will not increase the price of gasoline.
Apples and oranges.
who cares what other stuff costs per gallon. If we can't afford to fill our gas tanks, we aren't going to be buying all that other crap on the list. The price increases are all based on speculation and gas stations are gouging us into the poor house. At this rate, we will be not in a recession, but a depression as seen in the late 20's.
I'm not surprised all the packaged foods are the most costly. Brand marketing, promotion, packaging, and general marketing muckity muck all cost big bucks. When did we ever need product packaging tell us what an apple is? Personally, I don't buy any of the packaged crap.
...if I could get a car that could make a gallon of gas stretch as far with as much efficacy as I can stretch a gallon Dawn Dish Detergent.
And what Guest @ #1 said.
Actually, my key point is that since the demand for gasoline is much greater than all these other liquids, gasoline should be more expensive. Gasoline has to be refined from crude oil and transported to all over the world as well. It is not that different from any other consumable product.
I think the packaging and branding is a good reason why a lot of sodas are more expensive. We don't exactly sell gasoline in cans and colorful glass and plastic bottles. There is a little bit of branding involved, though. For example, Shell gas is always more expensive than a Chevron near where I live.
Gas is also cheap in America because we don't have as many taxes as European countries on it. This makes people drive more.
This is a good comparison...though, who is going to use a gallon of Krazy Glue or even milk as fast as they use a gallon of gas?
Gas is $3.50 a gallon, I use about 10 gallons per week costing roughly $35 per week. I buy milk by the 1/2 gallon for roughly $3 and it lasts 2 weeks--that's pretty cheap compared to the gas. Then, if you look at the Krazy Glue...it'd take me two lifetimes to use that much glue--making that $2300 number look pretty small.
Summer
That should not be puzzling. Demand isn't the only factor affecting price. Supply does too. Otherwise, how would you explain that air and water are both even cheaper than gasoline when you need the former to survive? Note however that gasoline is likely to become dearer than some of the other liquids on your list in the future. We've already gone past peak oil production and thus, supply will tighten, causing prices to rise to clear the market.
but...the same will become true of water before terribly long.
NOT true...water is a constant throughout the world, and with the polar ice caps melting the supply of water is just becoming more adbundant.
I don't think gasoline is cheap by any stretch of the imagination, or is illustrated by any comparison to the types of products you mentioned. Oil companies are drowning in profits. I'm sure that a gallon of gasoline is worth more than a gallon of tap water, but when Exxon reports that it is earning 10 million dollars PER HOUR (literally--http://www.bloomberg.com/apps/news?pid=20601109&sid=aZ9zrp0QJOKI&refer=home), I have trouble with anyone trying to explain that we should feel like we're getting a bargain!
Exxon earns a lot of money because there is a lot of demand for its products, but the oil industry's profit margin was only about 7.6% last year:
http://www.usnews.com/articles/business/economy/2008/02/01/exxons-profit...
Compare this to Coca cola: http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=KOThe profit margin on soda pop is 27%.
So I would argue that even though Exxon makes a crapload of money, the profit on gas is much less than the profit made on soda pop, and if you want to link how cheap you think a product is to corporate profits, then soda pop is much more expensive than gas.
Thanks for the comparisons. The only aspect of the cost of gas that bothers me is the oil companies profits; they are obscene. Like the failing Detroit automakers before them, they are drowning in their profits, rather than investing in alternative energies that will be so vital to our future.
Current gas costs and scarcity are the future of water. Both have hidden costs that we subsidize in other ways, and BOTH should be more expensive than they are now (epa.gov/waterinfrastructure).
Political and legal battles over water rights rage on, have for years. Meanwhile, Coke, Nestle, and Pepsi have all become a bigtime players in the bottled water industry. Do you buy bottled water now? What does it cost? Who's profiting from it? What social good comes from those profits? It already mirrors what the oil companies have done with gas.
Gasoline may be cheaper than Windex, but I'm not buying 15 gallons of Windex every other week.
Actually, drug company profits are higher than oil companys' profits, according to AARP. According to them, the top drug companies average 17% profit.
WRONG... that may have been true a few years ago, or in general, but EXXON had more profits than ANY company, including any pharmaceuticals
I bet if I could buy 10 gallons of krazy glue at a time I could get it at a price point much closer to gasoline... For that little glue I'm also paying for the packaging.
http://greasypc.blogspot.com for ways to cheaply (oftentimes free!) ways to keep your aging computer running years after your friends have already moved on because theirs were running so slow.
whomever thinks that we have reached peak oil, must stop reading literature from the 80's. why, there is 2 TRILLION barrels of oil right in the foothills of the american rockies. plus there are numerous new finds all over the world that are making the myth of oil scarcity, just that, a myth. sure, some of the finds are of difficult extraction quality, but most of them are not. "peak oil" exists to keep prices solid, and to enflame activists.
Any self-respecting Italian will tell you if you actually buy olive oil by the gallon (And yes you can buy it that way, in the big metal squares on the bottom shelf of your grocery store) it costs much less than $77 per gallon.
Maybe if you buy a small bottle and multiply the cost up to a gallon.
I'm certainly glad I don't need a gallon of make-up...
Everyone is taught about 'supply and demand' and yet something that should be more important doesn't cost as much as Coke... Granted, I like my cans of pop, but still. You're not going to see a potential war influenced by the threat to sugar and caramel colour.
We must have some pretty hefty subsidies.
This is a silly article.
On an unrelated note, why is gold so cheap in weight comparison to diamonds? One pound of gold costs a tenth of one pound of diamonds, it's nonsense!
I think you just reaffirmed my point some more. Diamonds are less useful than gold in many ways, but their prices are hyped up by marketing and propaganda. Lynn had a very popular article about the story behind why diamonds are expensive:
http://www.wisebread.com/the-greatest-story-ever-sold-is-a-fantasy-covered-in-blood
... can be between $3,000 - $8,000 per gallon depending on the brand.
Excuse me while I search for signs of intelligence on this blog.
Obviously things like monetary policies, inflation, and general economics are not even considered. Possibly because you are drinking too much tap water and the fluoride has killed off too many brain cells. Probably are oblivious to that too.
However let's just take a common sense approach...
what is value?
has the cost to produce and manufacture gasoline increased or decreased with technology over the past century?
does the demand exceed the supply?
has the price of gas really changed all that much?
or just the amount of gas you can buy with with a dollar?
how much gasoline could you buy with a dollar a century ago?
how much was gasoline could you buy with an ounce of gold a century ago?
how much gasoline could you buy with an ounce of gold today?
You can't make a horse drink, only lead it to water...
You know what?? I don't need any of those to get myself to work. Everyday..5 days a week. I don't need milk..to buy milk liquid Tide does not help me pay my income tax. Gas is not cheap!!!!
To be honest, $3 a gallon of gasoline a disgrace. Within the next century there WILL be an energy crisis and the US is selling gasoline at those prices.
In the UK, the cost of petrol is currently £3.78541178 (yes, pounds!) to the gallon. So, yes, gasoline to you americans IS cheap.
And, peak oil was reached in the US. Peak oil refers to oil production. It is true that there is (allegedly) enough fossil fuels stockpiled to carry us right up until 2100, but I don't know if this takes into account the predicted population explosion of the developing countries and their inevetable 'industrial reveolutions'.
It's so funny reading these comments from people after seeing the facts of the comparison. You could hold something right in front of their face and they would say no, that's not there. It's the psychology of having something a certain way for so long that it gets ingrained and change can't be accepted. Or maybe we've been spoiled all these years. I would like to know why after a hundred years of the piston engine that there has been no change. That would be like still having propeller airliners. I can't believe that there couldn't be an additive or a way gasoline could be made to stretch further. Or the entire piston process improved. As we've seen, using food additives just shortens that supply. But also we can't change over to something "environmentally friendly" or even different and quit drilling and refining oil at the same time.
I dont understand why everyone compares milk or bottled water or coffee or soda to gasoline. for one thing the only thing that compares in price to gas now adays is the 2% milk and whole milk, but i dont drink 15 gallons of milk while driving 250 miles. so this relationship is totally off. looking at the list on wisebread website the quantity of gallons used by any individual person pails in comparison to the useage of gasoline that same person uses.
So in conclusion GAS is EXPENSIVE. if u can find something that also can be used to propell your vehicle that costs more than gas then u can say that gas is cheap. if you want to compare gasoline with anything compare it to hydrogen, or electricity or anything else that can be used to move your car down the road, not milk or coffee.
I was having a conversation about the gas prices with my boyfriend's dad, from Northern Ireland. He was making the argument that gas really is cheap here and that we're quite lucky. I then made the point that he doesn't have to drive 20 miles to get the nearest grocery store.
Also the availability of public transportation in any place that isn't a major big city is non exinsistant or poor at best. Gas is expensive here and for those of us that live out in the country, it hurts that much worse.
I see it over and over. People astounded at record profits from oil companies. Here's a hint, people: oil companies make money selling oil, not gas. Granted they DO make money selling gas, but only 5 or 10 percent of their total profit comes from gasoline revenues. The other 90 to 95 percent comes from selling OIL.
The article is cool to see price comparisons. Although not accurate when negotiating prices but still interesting.
QUIT CRYING...everyone can complain about the gas prices all day and its not going to change a thing.
Be active instead of being a hippie environmentalist from California or Oregon. Everyone complains in California about gas prices but is too stoned and liberal to do anything. You cry about gas prices and when they try to fix the problem by drilling miles off the coast you freak out and pass stupid legislation. What very few people realize is when we have to rely on another country for gas they are going to screw us because they can. If everyone would QUIT CRYING about Global warming and all that other nonsense gas wold be cheaper. Corn is now expensive because of ethanol...thanks to AL Gore.
So put down your bong and get off your ass and make a change yourself. Quite waiting for someone to do it for you. The government will take a very long time.
which dweeb up there was it who thinks that a 7.6 percent profit margin isn't a big deal? especially when it's driving the price of every last one of those products mentioned in the comparison? i would imagine that every last exxon/mobil exec probably owns stock in krazy glue, too -- and can afford to, by the way, because they've stuck it to the american people so hard that their coffers are overflowing. please. come join the party with the rest of us who have cut back on dining out, probably won't take a vacation and are considering changing jobs or moving closer to work.
Do you think it would be possible to change our nation into one where public transportation is the norm, rather than having everyone in their own gas-guzzler?
Do you think that taxing gasoline, and bringing it up to the prices that Europe sees (~$8) would actually be a step in the right direction?
I know personally I've heard people complain about the price of gas, and use that as a reason for not driving - because it's too expensive. Perhaps if driving were even more expensive, people would be more inclined to use public transportation, and cities would then improve their transit systems
We might even see the price of an item made across the country as prohibitively expensive, and opt to purchase locally-manufactured goods, buy locally-grown food, and generally cut down on interstate shipping.
>NOT true...water is a constant throughout the world, and with >the polar ice caps melting the supply of water is just becoming >more adbundant.
All the polar ice is melting into a body of salt water making it difficult to extract again as fresh water. Desalination takes lotsa energy. The worldwide "distillation" system, the evaporation-clouds-rain system, is already working at a nominal pace so you won't necessarily see any more water that way. Mountain glaciers are also melting and unless someone uses the water before it flows all the way downhill and hits the sea, it is wasted. When glaciers are gone, they're gone. The ice was an excess benefit of rain/snow banking excess moisture deposits over a long period of time in out of the way places.
>whomever thinks that we have reached peak oil, must stop >reading literature from the 80's. why, there is 2 TRILLION >barrels of oil right in the foothills of the american rockies. >plus there are numerous new finds all over the world that are >making the myth of oil scarcity,
The words peak oil refer to peak "easy to pump" oil.
>sure, some of the finds are of difficult extraction quality, >but most of them are not
I doubt if it is most. Right now the price of oil is an auction price. What are you willing to pay vs how much work and profit someone else is willing to deliver. Lotsa players especially on the supply side. Even some Midwestern farmers now pumping oil from their farmlands from low pressure tapped out reservoirs. $100+ dollars a barrel makes it worthwhile. However if someone had a killer process for oil shale that worked at $100 a barrel we would see a flood of crude on the horizon. The fact that few are willing to step in and increase supply indicates the price has not reached a point to make it feasible, give or take the glacial pace of r&d, infrastructure and investment to make it all possible.
If we are looking for something that could go together quickly and take some of the heat off oil, Google methanol economy.
Gasoline may seem cheap when compared with other forms of liquids, but the price increases in gasoline is correlative to the prices of the other liquids. Increasing fuel prices will surely increase the other liquid products' prices. As was pointed out, gasoline is needed for manufacturing/transporting other liquids products.
The oil companies want you to forget about alternative energy by temporarily lowering their prices, and force the those new alternative fuel companies out of business, thus we continue to be oil dependent. Keep on pressuring your political representatives to invest in clean energy and do what you can to live as green as possible by the choices you make. You can make a difference.
http://www.oilwatchdog.org/articles/?storyId=23949
I really agree with you. I am just tired of all the complaining there is not one thing we can do about it. So live with it move on with your life. when you complain about not having enough money for gas just think about all the people that go without food, water, clothes ect. then say you don't have enough money.
In the US, gasoline is cheap. That is a fact. Americans just use so damn much of it!
I buy about one US gallon of gasoline a week, and often none at all. The US is so addicted and dependent on oil that it passed the point of lunacy years ago. Because the US has designed its economy around the automobile, it feels the pinch so much more when prices increase slightly.