Friday, May 6, 2011


Over the past few weeks I've been talking about how rising gas prices are squeezing disposable income. It's easy not to understand the relevance since often the posts have a bit of detachment to them (oil price rises to $100 USD per-barrel, gas up to $4 USD per gallon etc...) and its easy for some to lose the real world implications.

Enter the mighty Moe Lane from RedState and his post on this very subject. Some excerpts. 
This morning, I went out to fill up the gas tank of the car, and treat my kids to some fast-food breakfast. Nothing fancy: the car does not take premium gasoline, and we’re talking breakfast sandwiches and a hotcakes and sausage level of drive-through. Here are the receipts. 
See here for the gas receipt - Kev

Back in 2007 [a fillup of gas] would have cost me $37.08. And I can back up the numbers reasonably well:
  • Gas is easy; on January 08, 2007 the average price per gallon was $2.258*. I put in 13.292 gallons of gas into the car: that works out to $30.01. The cost this morning was $53.15 (77% increase). 
  • Tracking breakfast inflation is a little bit harder; fortunately, there’s something called the Big Mac Index, which tracks international prices of Big Macs in an attempt to get an idea of relative purchasing power of various currencies. But never mind that: the point is that the average price of an American Big Mac in 2007 was $3.22, and is $3.80 in 2011; at this level of analysis it seems more or less reasonable to assume that the 18% increase in four years is reflected across the menu. So that $8.34 meal in 2011 probably would have cost me about $7.07 in 2007 (which looks about right).
Moe then adds a key point.

To put this in even more basic terms: it costs me 60% more to fill up my tank and get ‘cheap’ fast food today than it did [in 2007] And if you’re wondering why if inflation is this bad, then it’s not being trumpeted across the sky in letters of fire, it’s because ‘core inflation’ - inflation that does not take into account food and energy prices - isn’t increasing as drastically. Which is… great, except that the problem is that food and energy prices are skyrocketing.
Moe's post vividly illustrates how skyrocketing food and energy prices take away purchasing power. In late 2006 if you had $60 dollars in your pocket and filled up your car and went to breakfast you would have about $30 left over.

Think of what you could buy with that $30 dollars. (I'm sure there are many things you would like to buy with $30 USD)

In 2011 that 30 dollars is going towards purchasing the the same items you were buying at far cheaper prices a mere 5 years ago. There has been no increase of quality of those items, its still the same as it was 5 years ago...expect for the price. Now if your paycheck rose 60% it really does not effect you but is that really happening?

In other words skyrocketing food and energy prices have robbed you of discretionary income. Discretionary income that is also taken out of the economy since this is happening to everyone. Entertainment (anime, movies, games, toys etc...) is discretionary spending and is not immune to inflationary pressures like this.

We will have to see if this type of inflation affects the big summer amine conventions since most fans have to drive to attend them. 

A quick note: I have done some editing to Moe's post since he is doing this make a larger political point. I've edited out the politics since that is not the point of my post here on The Reporter. ( IF you want to see the political point please head over to RedState to see where he goes with it.)

1 comment:

  1. PUH-LEEEEZE!!!!!!!! Spare me your patronizing attitude here, Kevin!!! You said it yourself, you don't even know how it will affect the big summer anime conventions! If people want to buy something they will buy it, if they want to get something they will go out of their way to get it. You keep on bitching and whining about this issue but you've come up with no solutions. Save this bullshit rhetoric for your blog!
    Sizzle. You lose. Donkeys need not apply. Ignition. Lift-off. Bye!