Each year, American drivers consume about 65 billion gallons of gasoline. (You can figure out how I derived this figure by seeing this useful chart published by the U.S. Department of Energy, and then noting that each barrel of crude oil produces about 19.5 gallons of gasoline.)
The average price of unleaded 87-octane gasoline in 2004 was $1.88 per gallon. Today it’s about $2.93 — so, $1.05 per gallon more today than in 2004. Thus, at $2.93 per gallon, we Americans are spending $68.3 billon more per year for gasoline than we spent in 2004. (I’m crudely assuming that this higher price of gasoline doesn’t cause the quantity demanded of gasoline to fall. Of course, to the extent that this higher price does cause quantity demanded to fall, the extra amount of money we spend on gasoline per year will be lower than $68.3 billion.)
Let’s put this figure in perspective: According to this just-released paper from the Cato Institute, Chris Edwards reports that the annual cost in 1995 of complying with federal-income-tax requirements was $112 billion. In 2005, this compliance cost was up to $265 billion — $153 billion more in 2005 than in 1995. Adjusted for inflation, this compliance-cost increase is $122 billion (in 2005 dollars).
Note that in 2005 our cost of complying with federal-income-tax regulations was $53.7 billion more, in real 2005 dollars, than the extra amount we’re now spending compared to 2004, on an annual basis, for gasoline.
And Congress has the gall to pontificate about the alleged unacceptability of the higher prices now charged by oil companies.