People really love to complain about gas prices, but is gas really overpriced? The short answer is no, the long answer is yes. Let’s explore this question and the reasons behind it. Before we do that, though, we’ll need to define some stuff. Gas prices are location-dependent, and Arlington, Virginia, will be our location of choice, and the gallon will be our unit of measurement. Next, what is considered overpriced? I think anything over $3.50 is overpriced. It’ll become obvious why later. Alright, let’s get into it. 

The average price of gas in Arlington is ~$2.90, but at the gas stations I personally checked, the prices were $2.77, $2.82, $2.77, and $2.80; averaging $2.79. Now then, why is it not overpriced, you ask? Because of food. Corn has risen in price, and the reasons why deserve their own article, but the price for a bushel of corn is ~$4.40. A bushel is ~1191.57oz, and since there are 128oz in a gallon, one bushel is ~9.3 gallons. So, $0.47 per gallon and three gallons of corn for one gallon of ethanol. This seems fine until you realize animals from chickens to cows are fed using corn, and bioethanol is created from your daily commute (10% of most gas is ethanol). This cost is passed on to you, the consumer. 

Products like dairy that rely on corn as feedstock have risen too; the price of a gallon of milk is ~$4.13, and a gallon of beef (comparing ounces in a gallon to ounces of beef)) is $49.38, but it is ~$5.92 per pound, and a hamburger contains ¼ of a pound. 

The point I’m trying to make is that food is much more expensive than gas (even though gas contains corn). Should it be cheaper? Yes, it should be. I’m not going to point blame but some government official who likes tariffs, want to subsidize the oil industry, and bombed Iran. By subsidizing the oil industry, the government is giving the gas companies enough money to stay in business with lower prices, but this is capitalism, and they can get away with just not doing it. Tariffs should also help–if gas isn’t imported, then gas prices should go down. It doesn’t, though, because it’s cheaper to sell our own gas to other countries and then buy theirs because foreign markets are often more lucrative. Gas could be cheaper, but gas companies don’t want it to be, and so they can afford to lobby their prices.

This is why gasoline prices are great, they maintain a reasonable price relative to other consumables even though we pay a premium on it already.