Gas Prices

[CyrilMorong]

I forgot a couple of the letters   April 8, 2004   Letters    No Need to Sing Those Gas-Guzzlin' Blues   The excellent April 6 editorial-page piece "Gas Panic" by Jerry Taylor and Peter Van Doren pointed out that real gasoline prices are not as high as the hysterics would have us believe. But it neglected to consider taxes, which further strengthens their conclusions that in real terms gasoline prices are significantly lower than in 1981 and only slightly higher than in 1955. Using 2003 and subtracting the current average federal and state excise taxes of $0.43/gallon, the after-tax price of gasoline is now averaging about $1.30/gallon. In 1981 (when gasoline taxes averaged $0.13/gallon), the real after-tax price was $2.11/gallon, $0.81/gallon more than today. For 1955 these calculations show a real after-tax price of $1.22/gallon. In other words, correcting for inflation and without federal and state excise taxes, gasoline prices would be only slightly higher than in 1955 and considerably lower than in 1981.   Salvatore Lazzari-Economist-Germantown, Md.   Messrs. Taylor and Van Doren evaluate the real price of gasoline in a historical context, concluding that current gas prices are at normal historic levels. However, their analysis should not stop there. Since fuel efficiency of autos has increased by more than 35% in the past 23 years, the real cost to drive a mile has declined precipitously. The authors cite the real price of gasoline in 1981 as $2.36 per gallon compared with today's price of $1.73, neglecting to put into context that today's cars get more than 22 miles to the gallon vs. a mere 16 back in 1981. Combining fuel efficiency with fuel prices, the real cost to power today's car one mile has greatly improved, decreasing from 15 cents per mile in 1981 to eight cents today. No wonder Americans are driving more.   James S. Tisch-CEO-Loews Corp.-New York