Rising Gas Prices

Rising gas prices; This is a subject we all know something about these days. How does this effect the avrege house hold? This is the question that this paper will atempt to address. In order to do so I came up with a formula to show how the price has changed in comperison to the change in household income over the same peroid. First I take the arverge income each year over the last twenty years. Then the averege fuel prices over the same time. Finely the avrege fuel consumption by a household. This last one takes into account beter fuel milege of the vehicls and any incress or decress in the miles driven by a household.

The US Census Bureau uses “U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement” (US Censes) to trake income. Acording to this, the avrege household income in 1988 was 34,500. The income of the avrge household has incressed over time at slitly more then the rate of inflation. By 2006 the Avrege income had risen to $44,400. Income grow at about 5% a year over the twenty year time period.

During the same time the avrege cost of gas has gone from $1.08 in 1988 to $0.91 in 1999 to $3.17 in 2006. From dec. of 2001-2006 the largest jump occured. Prices jumped from $1.13 to its high at $3.17 in July of 2006. From 2000-2006 gas incresed in price over 300%.

Many factors go into the incress in gas prices over time. The main one is supply and demand. Since 1988 the number of cars on the road has incressed by 3 times the rate of population growth over that time. With China leading the way. China’s increesing demand for gas is the number one facter in over all increeses in world gas prices. China’s demand for gas has gone from 13.25 billion barrels a year in 1988 to over 57.3 billion barrels in 2006. Wile gas output has only incressed by 45 billion barrels doring the same time. This has lead to incressed prices world wide for gas.

Finaly, the emount of gas consumed by the avrege household during the same time has also increesed. Even as gas milege has gone up, we have drivin more and more. In 1988 the was 979 galons of gas used per year per household. By 1994 it was 1039, 1998 it grow to 1103, 2002 was 1162, and by 2006 the avrege household was consuming 1188 gallins of gas a year. There were slight incresses and derceeses year to year but these where within the statistical margen of error.

What do all these numbers mean? That’s the question at hand. To get a quantitative number I tolk the averege gas consumption and multiplyed it by the avrege price doring the same time period. Then I tolk that number and divided it into the avrege income from the same time period. This would give me the percentige of income spent by the avrege household on gas prices. In 1988 houshols where spending