Some thoughts on GAS prices
Original post made by Oxymo Ron on May 4, 2008
Some years ago, my son sold his car and left for Europe. He came back understanding public transportation and the lack of need for the costs of a vehicle.
Today, I was at the Alamo Shell Station where a gentleman in a Jaguar, heading for Southern California, was concerned about the pump shutting off at US$75 and the fact that he had spent US$75 and did not fill his tanks.
I explained a lesson partially learned from my son. My cost of GAS never changes. I buy US$25 of GAS every two weeks and trust public transit for any exceptional travel beyond my gas budget.
Now consider that I sold a large luxury car that averaged 18 miles per gallon for a luxury sedan that averages 27 miles per gallon. That is a 50% fuel efficiency increase. Thus, my US$25 today is equivalent to $2.77 per gallon for equivalent fuel/mileage for my previous luxury sedan.
If I were to imply par value of the previous USDollar, now at 0.64 of par value, the gas I bought today has net present value at par value US$ of 1.77.
The oxymoron is how we hide inflation in the par value of currency and the choices of vehicles, including public transportation, that we choose to use.
Is that interesting?
One HAL of a Pal
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