Sunday, June 08, 2008

Apples and Oranges

It is often said that statistics can be found to prove anything, but Energy Tribune managing editor Robert Bryce, in a piece that appeared in today's Dallas Morning News, abuses statistics more than most in his effort to prove that $4/gallon gas is "cheap."

To make his case, Mr. Bryce resorts to comparing the price of gasoline to what it was 86 years ago in 1922. By going back that far, he is able to make a comparison to an inflation adjusted price that is higher than it has ever been since, with the exception of the spike in prices that took place around 1980. Mr Bryce, who does not note that he is benchmarking to a historic high, then says that today's price is only "slightly higher" than it was 86 years ago. However, he also mentions that the current price is 30% higher, which considering that the price has already been adjusted for inflation and is being compared to the second highest prices in the last 90 years, makes the description "slightly higher" more than a little questionable.

He goes on to claim that the price of gas as a percentage of the overall cost of driving a vehicle is also low. However, for this claim, he benchmarks to 1975, when the inflation adjusted cost of gasoline had reached a historic low point not seen at any other time until the price drops in the low 1980's and 1990's. He also uses 2006 fuel prices for this analysis. Gas now costs about 33% more.

Had Mr. Bryce argued that the prices we had gotten used to in the previous two decades were unsustainable anomalies, there would have been no argument. However, his use of data to try to claim that gas is now "cheap" simply does not fly.

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