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May 7--Prices for gasoline at the pump are higher than ever seen, say many in North Dakota. But "real" gas prices have been quite a bit higher before. The Associated Press reported that Pat Gilhooly in Bismarck "clenched his teeth and shook his head as he filled up his 1968 Chevelle and gas cans for his lawn mower and weed whacker." The price in Bismarck jumped a nickel Wednesday to just under $1.95 a gallon for regular, the same price commonly seen in Grand Forks. "This is cutting into my beer and fishing money," Gilhooly told AP. Monica Musich, president of Valley Dairy, which has seven convenience stores in Grand Forks and East Grand Forks, five of which sell gasoline, said it's about as high as she can remember. "I'm sure people realize we don't control it," said Musich. "It's better for everyone when gas prices are low." While the nationwide average hit $1.84, in the Twin Cities, several gas stations hit $2 a gallon and at one, $2.05, Wednesday, according to AP. Inflation, inflation But when inflation is taken into account, prices now are quite a bit lower than they used to be, in "real," or constant dollars. Using the common measure of inflation, the Consumer Price Index, for example, it takes $1.87 of today's money to match a buck 20 years ago. That means, if gas prices in 1984 read $1.50 at the pump, it would take $2.80 today to buy the same gallon. In inflation-adjusted terms, the peak price for gas was in March 1981, when the price was nearly $3 a gallon, in 2004 dollars, said Jonathan Cogan, energy information specialist for the U.S. Department of Energy. "Although we are seeing very high prices in nominal dollars, or those not adjusted for inflation, when we do take into account the changing value of the dollar, we are still quite a ways away from the peak price," he said. "Not that that's any consolation to people who have seen continuing increases in the price of gasoline." Gas prices spiked in 1973 and again in 1979 through 1983 based on Middle Eastern politics and wars, Cogan said. From 1986 to 1999, oil prices fell to historic lows, but have been rising since, more or less. Even so, from the long-term view, oil prices remain relatively mild, if not low, said Cyrus Bina, economics professor at the University of Minnesota-Morris, and author of a book on petroleum and the global political economy. Eighty years ago, for example, a gallon of gasoline cost $2.75 in today's dollars, making today's prices seem a bargain. However, drastic increases over recent months of 50 percent to 75 percent hit people's pocketbooks hard, Bina said. Demand has roared, as China and Japan have revved up their economies, and America has been no slacker, now using a fourth of the world's fossil fuel production, Bina said. More immediately, the war in Iraq and Afghanistan has greatly increased fuel use by the U.S. military. Meanwhile, refining capacity has lagged behind the increased demand, making the supply side slower, pushing up prices, Bina said. And Americans, with little public transportation compared to many nations, and lots of spacious skies and amber waves of grain, value low gas prices more than many peoples do, Bina said. Even so, rising gas prices shouldn't affect things now as much as they used to, because -- this may surprise you -- the place of energy prices overall in the U.S. economy has decreased in the past 20 years. Energy consumption per dollar of the nation's economy, measured in the Gross Domestic Product, is only half of what it was 50 years ago. That means, Cogan said, that "higher energy prices would have less impact on the economy's growth." That's partly because the service industry -- which uses relatively little energy -- has grown to be a much larger part of the economy, while the energy-intensive manufacturing sector has become a smaller piece of the pie, Cogan said. Energy use also has become more efficient. That may explain why, despite the steady rise in gas prices for months, people still want to buy the big four-wheel-drive stuff, said Ron Wilkening, sales manager at Rydell Auto Center in Grand Forks. "We're a farming community where people need pickups and things like that, and there are not a lot of 40- or 50-mile commutes to work and back," Wilkening said. "As far as the buying public goes, in Grand Forks and the surrounding area, so far gas prices haven't affected their buying habits. I'm not saying it's not going to, if prices keep going up." Farmers are in the hottest swing of spring planting, but the rising fuel prices won't change the way they farm, said Willie Huot, agricultural extension agent for Grand Forks County. Many farmers buy fuel and other supplies in advance, and everyone reading the news knew last fall that diesel fuel likely would be higher this spring, Huot said. If prices keep rising until next fall, it may change who plants what when, he said. So far at the Valley Dairy gas pumps, customers' buying habits haven't seemed to change, Musich said. While other liquids, such as milk and beer and bottled water and cough syrup cost more per gallon, gasoline seems a unique marker in the economy, she said. "People probably notice the price of gas so much more because what other commodity has it's price posted for everyone to see?" she said. (c) 2004, Grand Forks Herald, N.D. Distributed by Knight Ridder/Tribune Business News. ------------------------ Yahoo! Groups Sponsor ---------------------~--> Make a clean sweep of pop-up ads. Yahoo! Companion Toolbar. Now with Pop-Up Blocker. 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