Stop Whining About Gas Prices

Jake Levy's Detroit-area gas stations weren't much to look at: Orange signs with black letters looking like they may have been painted by, say, a fourth-grader. They simply said "OAK," named for his company, the Oakland County Gas & Oil Co. The stations themselves also were nondescript. Some were tiny islands, others were located in old store fronts. And business usually was brisk.

Self-serve didn't exist. Young "pump jockeys" dashed out, took your dollar and filled your tank with five gallons of pure, refined Oak gas.

Gasoline was somewhere between 15 and 20 cents a gallon back then, and "gas wars" were rampant. He may not have been called a "discounter" in those innocent days, but Mr. Levy was always a penny or two under the big name brands.

That wasn't his only lure. Sugar had been rationed during the war, so when it became available he gave away a pound of the sweet stuff with every fill-up. His picture adorned each box. Good old Jake.

One of his more enterprising promotions came a year after the war ended, when the U.S. Mint coined the Franklin D. Roosevelt dime. A polio victim, FDR had championed the "March of Dimes" to raise money to combat the deadly disease. He died in April 1945, so minting his likeness on the dime soon after was a fitting tribute.

A dime may not seem like much these days - folks routinely toss away beer and soda cans in Michigan, even though they can be redeemed for 10 cents each - but Jake Levy looked at the FDR dime and saw gold. Because they were new and depicted the late, enormously popular president, FDR dimes were like Pokemon cards in the early going: Everyone had to have one. Jake stocked up on them and began offering an FDR dime with every fill-up. He found no shortage of customers.

As this is written, it takes between 17 and 18 dimes to buy a gallon of gas in the Detroit area, and the only giveaways are free, splash-and-dash washes offered at some stations if you buy eight gallons or more. Yet even $1.80 is seen as a bargain after weeks of hovering at the $2 level, but steep when compared to the $1 to $1.25 commonly posted earlier this year.

Even at $1.80, gas remains cheaper than the "pure, spring water" Americans now consume in great quantities. What isn't surprising is all the hollering about the recent run-up in prices at the pump. Every politician from Washington to Main Street has called for remedies, from eliminating gasoline taxes to threatening the oil companies and tapping the nation's strategic oil reserves.

OPEC (the Organization of Petroleum Exporting Countries), the oil cartel that sets production rates and thus global crude oil prices, also took its licks. Americans were victimized by these rascals, which hardly is a charitable way of treating one's best customers. Half of our oil is imported.

All of this must sound like unbridled whining practically everywhere else in the world, where fuel prices typically are three times higher than the United States. The fact is, we've been spoiled by cheap gas and, like the baby who loses his pacifier, we're screaming like, well, a bunch of babies.

What's more surprising to those of us who've been around a few years is that gasoline has remained relatively inexpensive as long as it has, compared to other stuff we buy. OPEC turned down the spigot in 1973 to trigger the fi rst full-scale oil crisis, sending pump prices skyrocketing and creating long lines at stations nationwide.

Incidentally, in 1973 General Motors Corp. Chief Executive G. Richard Wagoner Jr. was 20 years old. Ford Motor Co. President Jacques Nasser was 25, and DaimlerChrysler AG Chairman Juergen Schrempp was 30.

But we didn't get the message in '73, so OPEC sent us another one in 1979, instigating the second major oil crisis of that decade. The fallout of these two episodes led to passenger-car federal fuel economy standards and a new word in the automotive lexicon: "Downsizing," which meant smaller cars and less powerful engines. Eventually fuel economy more than doubled as automakers pushed to meet the increasingly tougher federal corporate average fuel economy (CAFE) standards now capped at 28.5 miles per gallon (8.2L/100 km ) and all was right with the world.

For more than 20 years, there were few ripples as gas prices rose. But during those two decades, the automotive world changed drastically. Precisely because they then had only small cars powered by frugal 4-cyl. engines, the Japanese automakers were able to capitalize on the oil scares of the '70s. The Americans, caught with large cars and thirsty sixes and eights, rushed to build 4-bangers.

And when price stability returned, the Japanese began their drive to move upscale with new V-6s and subsequently V-8s, while their U.S. competitors joined in. The lowly 4-cyl. receded like memories of the oil crises as the race heated up for more power under the hood. My colleagues in the press still complain that in many instances cars and trucks are "underpowered," but then most of them have feet of lead.

And then the light truck and sport/utility vehicle (SUV) craze captured everyone's imagination, together snapping up 48.5% of U.S. sales in 1999 versus 22.6% 20 years earlier. Intrinsically more thirsty than passenger cars, these vehicles enjoy less stringent CAFE - 20.5 mpg (11.5L/100 km) - even though they replace passenger cars set at 28.5 mpg. The U.S. Senate recently threatened to raise the light-truck standard but backed off at the last minute.

So what we have here is a dilemma of our own making. Big vehicles, big engines and the wherewithal to pay $30,000 and up for a giant SUV, but not what amounts to pocket change these days to keep it running.

To be sure, higher fuel prices hurt lower-income folks the most, and perhaps they should be given something like fuel stamps or tax breaks amounting to an FDR dime or two per gallon.