Tuesday, May 31, 2011

Gas Rules Everything Around Me

Let me quickly explain what the chart below shows...

Since 1995 (the furthest back you can easily obtain real consumption by category), nominal gasoline purchases as a percent of personal consumption has increased by 44% (gasoline was 2.8% of all personal consumption, now it is 4.0%), while it has decreased by 33% in real terms (we now consume about 5% more gas in real terms, while overall consumption is up more than 58%).

In other words, we are spending a LOT more of our paychecks on gasoline, which in turn is becoming a much smaller portion of our real consumption. It would be rather interesting to know where the U.S. economy would be if all this consumption was freed for other goods / services (i.e. the benefit for the nation of investing in alternative energy).

Source: BEA