Is the ‘Pain At the Pump’ Fair?

BY Paul Solman  July 21, 2011 at 11:50 AM EST

Paul Solman answers questions from NewsHour viewers and web users on business and economic news most days on his Making Sen$e page. Here’s Thursday’s query:


Larry Bessler purchases gasoline at a Shell station in Chicago, Illinois. Photo by Scott Olson/Getty Images.

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Name: Stephen Sohasky Jr.

Question: Adjusted for inflation, I believe gasoline should be about $4.53 per gallon. The local news stations are making a feature of the “pain at the pump”. No one ever says that the price may have to go higher to equal the inflated value of the dollar. The Fed has flooded the economy with dollars. Is it fair to say that gas prices are where they should be?

Paul Solman: In my own view, gas prices are not where they should be. They’re far, far, far too low. Just compare what we pay to prices in Europe. Just think of how much gasoline we use because the price is as low as it is. See our story on the collateral benefits of higher prices at the pump.