Since the cost of everything goes up every year because of inflation, why is it expected that gas will stay the same price?

Question

Since the cost of everything goes up every year because of inflation, why is it expected that gas will stay the same price?

In: 4

Answer 1

because inflation is an aggregate – an average – of rising prices across an entire economy; not a measure of only one product’s price within that economy.

Inflation is going to account for all manner of goods and services, and their prices – not just gasoline.

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I mean that in the sense that in 2018, gasoline in my state was around $2.80. Now it’s around $4.05. That’s about a 44% increase, and if we treat inflation as equal, that would imply that over the last 4 years inflation was 11%.

Except inflation *hasn’t been* 11%.

Using gasoline alone to determine inflation is a bad faith argument here.

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We can instead look at crude oil price per barrel, which here’s a handy link

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=f000000__3&f=m

The last time a barrel was going for under $10 was 1998-1999, a few brief months of that winter holiday season. Otherwise it has generally and consistently risen from around $10 to the data from last year’s numbers of around $50-70/barrel.

Inflation again here isn’t going to match – not only because the percentage won’t match on years prices increase, but it won’t be able to reconcile with years the price for a barrel of crude dropped.

I would expect the actual answer to OP’s question is much more related to supply and demand, rather than inflation.

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Which if we consider things over the last few decades like ethanol additives to stretch gasoline out a bit, or fracking practices to add more local (and thus cheaper) oil into a supply that competes with foreign oil, we can understand better how and why gas prices are what they are – much better than examining inflation as only one cause.