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Snapshot for November 1, 2006.

Fuel for Thought: The High Cost of Energy

By Max B. Sawicky

After exceeding $3.00 per gallon, gas prices fell this fall and many breathed easier. Lost in the relief, however, was the fact that prices are still well above relatively recent levels. Figure A shows prices of gasoline, diesel, and home heating oil since 1998, adjusted for inflation. Figure B shows prices for natural gas. All show large increases for 2006, compared to 1998: gasoline, up 75%; home heating oil, up 122%; diesel, up 96%; natural gas, up 166%.

Many families have seen little or no wage growth since 2001, so these fuel prices leave them in worse shape five years after the end of the recession.

Notes: All prices are adjusted to 2006 dollars with the CPI-U. All energy data is from the Energy Information Administration. Gasoline is the “all grades all formulations retail” in dollars per gallon. Home heating oil is “U.S. No. 2 Heating Oil Residential Price,” dollars per gallon. Diesel is “U.S. No. 2 Retail Sales by All Sellers,” dollars per gallon. Natural gas is “Futures Contract 1,” dollars per million BTU, prices for the last day of October, 1998-2006.