Tuesday, March 29, 2011

Do you think gas prices are too high?

Don't blame the Arabs. Blame the Federal Reserve Bank for inflating our currency over the years. I can prove to you that today's gasoline prices, in real terms, are lower than they were during the Great Depression! Let me walk you through the math:

  1. Prior to 1965, the value of the United States dollar was set at 412½ grains (0.7736 troy ounces) of silver .900 fine.*
  2. At yesterday's close (Monex), the price of a troy ounce of silver was $37.05.
  3. Therefore, by multiplying $37.05 by 0.7736, we find that the silver value of the U.S. dollar is $28.66.
  4. The average price for regular unleaded gasoline in Columbus this morning is $3.46 per gallon (calculated by averaging the highest and lowest prices at columbusgasprices.com).
  5. By dividing $3.46 by $28.66, we find that the price of gasoline in the silver coin used prior to 1965 is 12.07¢ per gallon.
  6. The lowest unadjusted ("nominal") price for regular gasoline (which was leaded in those days) was 17¢ per gallon in 1931 (Department of Energy analysis). 
This suggests two logical conclusions:
  1. The wars in Iraq and Libya are simply excuses to waste American lives and materials to support the military-industrial complex at taxpayer expense, and
  2. The perceived increase in gasoline prices reflects the inflation that the United States has endured since the Federal Reserve Bank was established in 1914.
This is why we need to "end the Fed," and end the wars. The American people are paying for wars in the Middle East, which when coupled with unreasonable restrictions on oil exploration by American companies, act against our own interest..

* Technically, today's silver bullion coins are at least .999 fine, which means that the old silver dollar of 0.7736 troy ounces should be adjusted for fineness to 0.6969; however this additional calculation is not necessary to establish the point I am making. Following through with this adjustment would yield a gasoline price of 13.4¢ per gallon.


Harold Thomas said...

Seventeen cents per gallon in silver coin equates to $4.87 per gallon in today's Federal Reserve Notes.

Steven P. Cornett said...

You mean that $5.00 a gallon gas they keep threatening us with?

In other words, gas will remain worth what it always was but they'll steal our wealth to make it unaffordable.

They promise. And they will keep that promise!

Harold Thomas said...

Your analysis is correct. This is why we need to END THE FED and return to a silver- or gold-based currency.

Jason said...

Don't forget to blame the federal reserve for your high salary also. Those bastards, I shouldn't be making 6 figures.

A useful comparison would have shown average income vs gas prices.

Another thing to note... you are ultimately comparing two commodities. Useable (mined) gold is now in much greater abundence as it was before, wereas useable oil is consumed as it is extracted. The cost of getting oil has increased, but gold should be less worth now than it was in the past due to the increased supply.

As more and more gold is mined and more and more oil is used up, you should see the ratio of gold/oil value increasing.