Consumers may be cringing as they pay for gasoline, while picking up a bottled water, and while they're at it, a six-pack of Budweiser. Those who do some quick calculations would discover that the gasoline they just purchased is the best value among all the items in their bag, according to Connecticut-based research firm John S. Herold Inc. Bottled water actually costs $3 per gallon, the firm reports in its occasional look at the cost of crude oil and gasoline in comparison with other liquids. And America's beloved Budweiser? Consumers could quickly spend $300 filling up their tanks with the King of Beers, according to the Herold analysis. Gasoline in the U.S. is actually cheaper than in the 1980s. "If prices of gas and crude oil had kept pace with the inflation rate since the early 1980s, gas would now be $4 per gallon," say Herold senior vice president and director of research Nicholas Cacchione and the firm's chairman and chief executive officer Art Smith. Since the 1980s, gasoline prices have grown half the rate of inflation on postage, one-third that of airfare and one-eighth that of college tuition. "Ironically, it is the past 20 years of very cheap gasoline prices that have promoted lax driving habits and contributed to the rising cost of gasoline today," Cacchione and Smith report. "Over the past decade, consumers have been able to indulge in ever-larger, more comfortable and less fuel-efficient cars, given the inexpensive price of gasoline we have enjoyed." In April, Ford Expedition sales fell nearly 34%, while Chevrolet Suburban and Hummer H2 sales dropped 21% each, they report. Nevertheless, reduced demand for gasoline may not cause prices to drop, they add. "North American consumers of energy...are addicted to cheap and easily available fuel and can't do without it," Cacchione and Smith report.
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