I hated paying fifty-five cents for a gallon of gas in mid-1974, eight months after the Arab oil lords got cheesed off at the United States for backing the Israelis in the Yom Kippur War and shut down the black gold that had been flowing to us at the bargain-basement price of $3.65 per barrel. I was a hack, my cab was a used 1971 Plymouth Fury with a thirsty V-8, and I wasn't making any money. Fifty-five cents per gallon might not sound like much to you, but gas had been thirty-eight cents the previous spring. Because I found an amusing calculator on the Federal Reserve Bank of Minneapolis's Web site that adjusts prices in real dollars from any year between 1913 and today, I can tell you that the jump from thirty-eight to fifty-five cents is the equivalent of gas shooting from $1.67 to $2.17 a gallon in today's money. And I can tell you that $3.65 is $16.00 today.
A little aside: I'm completely wrapped up in this online calculator. I am criminally math-challenged. My high-school math teacher Tom Loges, whose three sisters (Judy, Mary, and Fran) babysat my many brothers and me, entered me in the Michigan high school competitive math scholarship contest as a placebo. I did not disappoint; I failed. With this calculator, I don't have to understand the Consumer Price Index or any related complicated formulae. I plug in the numbers and Presto! I discover that I paid Ann Arbor $200 ($789.45) a year for my cab license; that insurance cost me $500 ($1973.63) a year, with a $50 ($197.36) deductible; and that the fare rate was fifty cents ($1.97) when you got in the cab and fifty cents ($1.97) per mile thereafter. One not-so-fine summer day, near the end of my five-year run as a cabbie, I made $11.00 ($43.42) for an entire eight-hour shift and started looking for real work. Which is how I ended up as a mechanic at the Chrysler test track.
So, I was making negative money back then. I'm serious. I was audited two years in a row for not making enough to maintain life, and I don't mean the life to which I have become so royally accustomed. I mean, I couldn't afford underwear, let alone the Fiat 500 in my garage today.
After the first audit, the IRS sent me home with a check for $34.00. They said I'd forgotten to apply to the state for my gas tax rebate. Huh? The clouds parted. Angels descended from heaven. Trumpets blew. I didn't make that rookie cab owner mistake again. After the next year's audit, I ended up owing a couple hundred bucks for remembering the rebate but "forgetting" to note that fact on my return.
But, really, the problem wasn't the price of gas. It was that the 1973 embargo virtually shut down the tap, closing fuel stations all over the country. My Plymouth Fury got maybe seven miles to the gallon with a tailwind. It was my livelihood. I was driving about 1000 miles a week just on the day shift. I remember waiting hours in line for gas and waiting for gas that ran out before I got to the pump.
The government jumped in with a 55-mph freeway speed limit, corporate average fuel economy (CAFE) standards, and EPA fuel economy ratings. The economy took a dive that lasted nearly ten years. OPEC, surprised at the wide-reaching effect of its petulance, kept pouring on the price increases as it gradually reopened the flow.
The fickle public that had left those funny little Japanese tin cans rusting on the docks suddenly couldn't get enough of them. Honda ran ads in mid-1974 presenting the 1974 EPA test results, showing the Civic (frankly, a piece of crap) at the top of the heap with 29.1 mpg and forty-one Detroit gas hogs that were unable to make double digits. Mercedes ran ads claiming that the 450SE got better mileage than any domestic luxury sedan. (The Honda ad listed the M-B 450 with 10.6 mpg.) BMW advertised its 2002 as "amazingly easy on fuel," delivering 22.6 mpg, with the hot 2002tii achieving 20.3 mpg. Porsche advertised the 911's stellar 24 mpg and its 21-gallon fuel tank with the tagline, "Who says an economy car has to be an economy car."
This is no real fuel crisis. But if the mainstream media have you baffled by their talk of record fuel prices and your friends are going hybrid, do the math (at minneapolisfed.org, of course).
Then read assistant editor Erik Johnson's first feature story on page 50 and ask yourself, Who says an economy car has to be an economy car?