Inflation-Adjusted Gas Prices at Record Levels as China Raises Energy Prices

by: Kirk Lindstrom posted on: June 22, 2008 | about stocks: CVX / IYE / OIL / RDS.A / UNG / USO / XLE / XOM    

Gasoline prices have nearly doubled in less than a year. That is only half the story. This chart, courtesy of StockCharts.com, shows oil and gasoline prices have more than tripled since January 2005!

click to enlarge
This chart shows that the share prices for the major oil companies have risen right along with the price of energy.

Our pain at the pump has been their gain, which may explain the bad feelings towards the oil industry.

One reason oil prices have continued to go up despite higher prices that are supposed to lower demand is some countries like China set prices that force their refiners to sell gasoline at a loss. It works out as a government mandated subsidy for consumers and industry. Thursday China raised fuel prices to curb demand.

 

June 20 (Bloomberg) -- China, the world's second-biggest oil-consuming nation, unexpectedly raised gasoline and diesel prices by at least 17 percent and increased power tariffs to rein in energy use, potentially driving up inflation.

The record price increase, the first since November, may ease refining losses at China Petroleum & Chemical Corp. and PetroChina Co., who have been forced to sell fuels below cost. The companies' shares rose in Hong Kong trading.

 

This chart, courtesy of StockCharts.com, shows oil and S&P 500 prices.


This chart, courtesy of

Chart of the Day

, shows

gasoline prices adjusted for inflation.

Of note on the chart:

  1. After adjusting for inflation, gasoline prices are at record highs that are 18% above the old inflation-adjusted peak of 1981!
  2. Gasoline prices are above a trend channel (see red line) that has been in existence since early 2000.
  3. Large spikes in oil prices are often followed by recessions.

The days of cheap energy are probably gone but as major users of gasoline, such as China, allow prices consumers pay to go up, we should get some relief from the relentless price hikes for energy.

Disclosure: None

This article has 7 comments! Add yours below...
Kirk Lindstrom

Kirk Lindstrom

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This article has 7 comments:

  •  
    Charlie
    Peters
    Jun 22 10:43 AM
    What was the cause of death of Alexander Farrell, 46, expert on alternative fuels?



    www.sfgate.com/cgi-bin...

    www.latimes.com/news/s...
  •  
    Loren
    Jun 22 10:47 AM
    My Website
    I think people need to realize that the gas prices, like you said, are most likely here to stay. We just need to find alternative methods of saving money on gas. Here in Erie PA we are seeing massive decrease in SUV sales - probably just one of the many changes to happen in the next year(s). It will be interesting to see how it turns out.
  •  
    Shaggieman
    Jun 22 11:06 AM
    This is really marks the death of the SUV. The news says the $30K SUV's are now selling for about $8K and many that bought are now underwater on their loans.

    The car companies are all losing their butts cause they don't make as much off the smaller fuel efficient cars.
  •  
    captbob
    Jun 22 01:47 PM
    It's not how much they pay, it's how much they consume!
    There's not enough oil production in the world for 2 billion Chinese and Indians to go from bicycle to scooter no matter what they pay!
    They're just like us-without high prices they would step up to cars!!
    High prices=we give up SUV's for a Prious.
    " " =They give up a scooter for a motorbike.
    Either way all the worlds production is consumed!=prices stay high!
  •  
    pockyclips
    2020
    Jun 23 08:49 AM
    Manifest Destiny ended 100 years ago, but we are still in the mindset that we can always find more. As long as we show that we are unwilling to adapt, energy prices will continue to rob our country of its vitality, and enriching our enemies at the same time.

    Some legacy we our leaving our kids: "I want it all, I want it all, I want it all, I want it now." Bush/Cheney has some nerve comparing themselves to Truman. They have sold the Western democracies down the river to line their and their friends pockets.

  •  
    jatin
    Jun 24 02:33 PM
    like everything great which comes to an end its the western dynasty this time . As some one mentioned you people are your self giving money to your enmies and robbing your future genrations , it ll be like a poor and stagflated america for the next genration gone are the days of ford 450 truck coming are the days of small cars and buses like the poor third world countries Sad But True
  •  
    jatin
    Jun 24 02:42 PM
    And one more thing i would like to state as a analsty with a european bank , Half of this pain to americans and the world is due to policy of a few capitalists amongst you WHY TO HAVE CRUDE TRADING ,INFACT NOT TRADING ,but being built into bubble by you people only to hurt you guys,and the rest of the world stop crude futures trading at Nymex and see prices fall below 100 $ in 3 months
    Also get out of middle east or see prices above 250$ in 5 year and america = former soviet union -- there is a saying that if a dog is barking you dont bite em back same way if these middle easterns are barking and iranians palestinians Americans should chill and not go out and fight to loose men money and time doing nothing in IRAQ ,but then u guys really go after something and give 110 % even if it means talking a loss Hats of to you GOD BLESS AMERICA
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