Actually, Gas Prices Aren’t That High

The steady rise in gasoline prices continues to dominate the news. How high are gas prices in historic terms?

In the context of recent history–say, the past decade–they are quite high. But if one takes a longer view, they are fairly low.

The Energy Department estimates that this year, the average cost in the U.S. for a gallon of unleaded gasoline will be $1.46. That is 25 percent higher than last year’s average of $1.17 a gallon (after adjusting for inflation). In real terms, it will be the highest gas price that Americans have paid in a decade.

But in the preceding seven decades, there are only four years in which the price of a gallon of regular gasoline was as low as it is today. Those years came during the late 1980s, after the oil crisis of the1970s had receded and before the Persian Gulf War drove prices back up. In 1981–the high-water mark for gasoline prices during the oil crisis–a gallon cost $2.49 (again, adjusted for inflation to today’s dollars), which is 71 percent higher than today.

We have almost reached the average price during the Gulf War, which was $1.48 in today’s dollars. Still, we have little reason to feel sorry for ourselves. The Energy Department estimates that next year the price will drop to $1.32 in today’s dollars (the inflation-sensitive pumps will call it $1.34). If that happens, 2001 will be one of the nine cheapest years for regular gasoline on record.

The chart below shows the price of gasoline since 1920, as provided by the Department of Energy. All prices are given in today’s dollars.

Next question?

Explainer thanksSlatereader David Agosto for the suggesting the question and David Costello of the Energy Information Administration for helping answer it.