Gas prices are perhaps one of the most visible costs in the economy. After all, on just about every street in America, there’s a gas station with a big sign out front telling us what the latest prices are. Those prices also tend to be rather volatile, which makes gas prices one of the most controversial costs in America too.
For years politicians have campaigned on lowering the price of gas. The RNC is hitting President Obama for his promises to lower gas prices in a new ad:
Republican candidates, too, are vowing to lower gas prices with Newt Gingrich mentioning a specific price of $2.50 per gallon.
It’s always amazed me how political rhetoric is expended on gas prices given how minute, really, the price swings are in terms of cost to an individual.
Currently the national average for the cost of a gallon of gasoline is $3.64. If Newt Gingrich were successful in reducing gas prices to $2.50/gallon, that’d be a savings of $1.14 per gallon, or $22.80 on a 20-gallon fill-up. Assuming an average of two fill-ups per month, we’re talking about a difference of just over $45 or $547.20 per year.
Now, I’m not saying an extra $45 or $50 per month wouldn’t be important to a lot of families, but in proportion to the amount of time spent debating gas prices, it’s a small difference.
Besides, prices will be what they will be. Oil prices reflect an enormous number of variables, from weather conditions in the oil fields to foreign political strife. The most we should want from a politician is a promise not to tax, regulate or otherwise impede the production of energy needlessly.
The best solution for energy prices is a free energy market.