1. Economics for your Classroom from Ed Dolan’s Econ Blog By One Measure, the Cost of Driving is Now Lower than Ever Before Dec. 29, 2014
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2. How Much Does it Cost to Drive Your Car a Mile?
When you think of the cost of driving your car a mile, you probably think of the out-of-pocket cost—the money you pay at the pump
Economists, instead, like to look at the opportunity cost—what did you have to give up to drive a mile?
One way to measure opportunity cost is to ask, how many minutes do you have to work to buy the gas you need to drive a mile?
Workers assemble flywheels for Model T cars in a 1913 Ford assembly plant
Dec. 29, 2014 Ed Dolan’s Econ Blog

3. How to Calculate Opportunity Cost
The opportunity cost of driving, measured in minutes worked per mile, depends on three things:
Your wage, in dollars per hour
The price of gasoline in dollars per gallon
The efficiency of your car in miles per gallon
Example:
You earn $18 per hour
Gas costs $3.00 per gallon
An hour’s wage buys 6 gallons of gas, or 10 minutes of work per gallon
Your car gets 25 miles per gallon
Ten minutes work gets you 25 miles, which means the opportunity cost of driving is 0.4 minutes (24 seconds) worked per mile
Dec. 29, 2014 Ed Dolan’s Econ Blog

4. Dec. 29, 2014 Ed Dolan’s Econ Blog
1919: 1.7 Minutes per Mile
In 1919, a nonsupervisory worker earned about 50 cents per hour
A gallon of gasoline cost about 25 cents
A Model T Ford got about 17 miles per gallon
That works out to about 1.7 minutes per mile
1919 Ford
Model T Highboy Coupe
Dec. 29, 2014 Ed Dolan’s Econ Blog

5. Dec. 29, 2014 Ed Dolan’s Econ Blog
1935: 1.2 Minutes per Mile
In 1935, a typical worker earned about 56 cents per hour
A gallon of gasoline cost about 17 cents
A Ford V-8 got about 15 miles per gallon
That works out to about 1.2 minutes per mile
1935 Ford Phaeton
Dec. 29, 2014 Ed Dolan’s Econ Blog

6. Dec. 29, 2014 Ed Dolan’s Econ Blog
1950: 28 Seconds per Mile
By 1950, a typical worker earned $1.59 per hour
A gallon of gasoline cost 18 cents
A Ford V-8 got 14 miles per gallon
That comes to just under half a minute per mile
1950 Ford Custom Tudor
Dec. 29, 2014 Ed Dolan’s Econ Blog

7. Dec. 29, 2014 Ed Dolan’s Econ Blog
2014: 11 seconds per Mile
By December 2014, an average nonsupervisory worker earned $20.74 per hour
A gallon of gasoline averaged $2.40
My 2014 Ford Fiesta* is rated at 36 miles per gallon (although it actually does a little better than that)
At that rate, it takes just 11 seconds to earn enough to drive a mile
*Eco-boost gasoline engine, 3 cyl, 1 liter, turbocharged, not a hybrid
My 2014 Ford Fiesta
Dec. 29, 2014 Ed Dolan’s Econ Blog

8. Dec. 29, 2014 Ed Dolan’s Econ Blog
The 100-Year Trend
This chart shows the entire 100-year trend, based on the average wage of production and nonsupervisory workers and the US average gasoline price
The red points and trend line are based on selected popular Ford models
The blue line is based on the average fuel economy of all cars on the road, both old and new
The bottom line: If you drive Ford’s most efficient gasoline model (excluding electrics and hybrids), the opportunity cost of driving is at an all time low
Dec. 29, 2014 Ed Dolan’s Econ Blog

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