Sunday, February 10, 2008

Blast From the Past

Last night, Jake and I watched a great movie on AMC--Die Hard, from 1988. This movie is so old, Bruce Willis had HAIR. I had forgotten how good it was, and really enjoyed it. But here's the funny thing--there's a scene where a cop pulls up to a gas station, and the price of gas on the marquee (in Los Angeles, even) is 78 cents a gallon! That got my wheels turning. Obviously, the price of everything else has gone up, too. My old personal finance teacher taught us the "Rule of 72," which says that if you divide 72 by the number of years it takes a price (or an investment) to double in value, you'll get back the percentage of increase. It's been exactly 20 years since then, and it looks like gas has basically doubled twice. So a 10-year doubling time, or a 7.2% annual inflation rate for gasoline. But the annual rate of inflation nationwide (and my corresponding cost of living raises) have been about half of that: 3-4%, or doubling in about 20 years. So no wonder my fuel bill takes a bite out of the budget--it's twice what it was relative to everything else compared to when I was in college!

(BTW--Don't do this math with the cost of college or health care... it's even more depressing.)


bekster said...

As young as I am, I actually remember gas being that cheap. I also remember after 9/11 happened, one of my teachers in school (yes, I was a senior in high school, shut up) predicted that the prices of gas would go up to $3/gal. We didn't believe him. Makes me re-think my opinion of some of the other things he said...

Goode Design said...

lol... So, has anyone ever thought about investing in energy for the long term?

I'd like to hear one econ teacher tell me why energy (oil, gas, corn, etc..) is not a good bet for the foreseeable future.

Security Word Verification:
Oixvrli: n.The intestinal folds of the oil monster.