Gasoline Prices and Inflation

Paper Summary:

This paper discusses how the core concern and primary factor related to the price of gasoline is the understanding of inflation adjustment and in compensating for inflation in determining the true cost of gasoline. While the general population prefers to recall or at least read about the relatively low cost of gasoline in the 1960s when the average cost of fuel was .30 cents a gallon, in inflation adjusted terms this would be equivalent to roughly $1.70 today (Gasoline). The paper explains that the price of gasoline, and certainly of gasoline related spikes in the average cost of goods, is a major contributor to inflation and yet, factoring for the effects of inflation across the economy, tends to reduce the real cost of fuel.

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