Pain at the pump was higher in the early 1960s.
John McCain proposes an end to the ban on offshore drilling and has pushed for a gas-tax holiday because "we need it, we need it very badly."
But both candidates and the public evidently are unaware of a basic fact: Gasoline is more affordable for American families now than it was in the days of the gas-guzzling muscle cars of the early 1960s. Prices are beginning to come down somewhat, but this was true even when the national average was at its summer peak.
Two-thirds of American voters say they think that the price of gas is "an extremely important political issue," and many believe that it will cause them "serious" financial hardship, according to a recent survey by the Associated Press and Yahoo.
Although it's true that the real (inflation-adjusted) and nominal (posted) prices of gasoline are higher than at any time since World War II, even at the recent peak national average of $4.11 a gallon, gasoline is still more affordable today than it was during the Kennedy administration.
Federal Reserve Chairman Ben Bernanke worries that increasing fuel prices might eat up so much disposable income that it flat-lines consumer spending and tanks the economy. But it's difficult to square that worry with what we call the "affordability index" – the ratio of the average person's disposable income to the price of gasoline.
After studying the average yearly price of gasoline from 1949 to 2007, and assigning the number "1" to the ratio in 1960, we found today's prices comparable to what they were in 1960 (1.35 today to 1.00 in 1960, with a high of 3.32 in 1998). The higher the gasoline affordability index figure, the lower the price of gasoline relative to disposable income.