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A Gallon of Gas Now Costs More Than the Federal Minimum Wage in These US Cities

By Jon Miltimore

As nearly 40 million Americans traveled over the for Memorial Day weekend, they were confronted with an unpleasant reality: gasoline prices are through the roof.

During the previous week, for the first time ever, gas prices topped $4 in every single state. On Wednesday, Florida hit a new record high—$4.57 a gallon. That’s a lot, but it pales in comparison to California, where the average price per gallon was $6.06 as of Monday. In some parts of the Golden State, however, prices are even much higher.

CBS News article published Tuesday pointed out that the price of a gallon of gas at many California service stations was higher than the federal minimum wage. According to GasBuddy, the following locations were $7.25+.

Chevron at 901 N. Alameda St. in Los Angeles: $7.83 a gallon

Chevron at 51557 US-395 in Lee Vining: $7.39 a gallon

Chevron at 712 North CA-127 in Shoshone: $7.39 a gallon

Shell at 453 Main St. in Bridgeport: $7.39 a gallon

Valero at 377 Main St. in Bridgeport: $7.35 a gallon

Mobil at 8489 Beverly Blvd. in Los Angeles: $7.29 a gallon

Shell at 51424 US-395 in Lee Vining: $7.29 a gallon

Mobil at 22 Vista Point Drive in Lee Vining: $7.29 a gallon

Chevron at 3600 Alameda Drive in Menlo Park: $7.25 a gallon

Many people would look at the figures above and come to a simple conclusion: the federal minimum wage needs to be increased!

Unfortunately, it’s precisely that kind of economic thinking that landed Americans with $7.25 gasoline.

The urge to mandate “good” things and ban “bad” things is at the root of many of the greatest problems facing America today. Both of these actions share a common, unwelcome bedfellow: unintended consequences.

The historian Niall Ferguson has noted that “the law of unintended consequences is the only real law of history”—and for good reason. It’s an idea that stretches back to philosopher John Locke, economists Adam Smith and Frédéric Bastiat, and beyond.

When politicians raise the minimum wage, the intended consequence is clear: a higher wage for workers. The unintended consequences get less attention: less employment, higher consumer prices, reduced benefits, and in many cases lower compensation for workers.

Similarly, when politicians kill oil pipelines, restrict fracking, cancel drilling leases, and pass a slew of energy regulations that can hardly be counted, the intended consequence is (sort of) clear: less reliance on fossil fuels. The unintended consequences, however, are painful: higher energy prices.

This is why the great writer Henry Hazlitt, the author of Economics in One Lesson, said it was imperative to consider the secondary consequences of a given action, something people often fail to do.

“This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group,” Hazlitt wrote in his seminal work, “and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.”

High gas prices won’t stop my family from enjoying our annual Memorial Day mini-vacation.

We’ll be traveling to Appleton, Wisconsin for some R&R with friends and family. There will be lots of swimming, cornhole, meat sizzling on the grill, and some cold, frothy beverages for the adults. But we’re in the fortunate position; we don’t feel gasoline prices as much as the average American family. My wife and I both work and are in our prime earning years. Our cars and student loans are paid off. The kids are all out of daycare.

But I wonder how many families around the country will struggle to fill that tank this Memorial Day weekend, and how many might have to skip their vacation altogether because they just can’t make ends meet.

It makes me sad to think about it, frankly.

Still, it’s a good reminder that even in a country like the USA, which has so much, there’s a price to pay for overlooking secondary consequences. It’s also a good reminder that bans and mandates are not the path to a prosperous future.

Jonathan Miltimore (jmiltimore@fee.org) is the Managing Editor of FEE.org. 

Originally published by the Foundation for Economic Education. Republished with permission under a Creative Commons Attribution 4.0 International License.

For more on gas prices click here.

Jonathan Miltimore
Jonathan Miltimore
Jonathan Miltimore is the Managing Editor of FEE.org. His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune.

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