By Jesse Taylor Perhaps years of reading people mixing up average and median statistics in relation to income has left me jaded, but I'm highly suspicious of this LA Times piece theorizing that the rises in gas prices aren't really that bad, because average disposable income has risen.
After studying the average yearly price of gasoline from 1949 to 2007, and assigning the number "1" to the ratio in 1960, we found today's prices comparable to what they were in 1960 (1.35 today to 1.00 in 1960, with a high of 3.32 in 1998). The higher the gasoline affordability index figure, the lower the price of gasoline relative to disposable income.Consumer anger about rising fuel prices has taken a while to build because, until the last year or so, the increases could be shrugged off as natural year-to-year price variation. Moreover, pump prices still seemed relatively cheap given increases in personal wealth. Personal disposable income since 2000, for instance, has increased by an average of about $4,800 a person. Those very real increases in economic well-being reduced the pain of higher prices at the pump. People didn't notice that real gas prices were higher because the percentage of their income going to the gas station was at an all-time low until recently.
