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Real U.S. Gas Prices? Still Real Bad

by Blake Clayton
February 27, 2012

Some readers of my post on Friday about record-high seasonal gasoline prices asked a good question: Were those data adjusted for inflation?

Answer: No, they weren’t. They were nominal prices. So what do the inflation-adjusted data show?

The bottom line: accounting for inflation doesn’t make the picture any prettier. In fact, it puts today’s seasonal U.S. gas prices in even starker terms historically (1979 anyone?).

Figure 1 depicts U.S. retail average gasoline prices adjusted for inflation, during the month of January only, from 1976 through 2012. Last month’s $3.38 a gallon was essentially even with January 1981 ($3.39) as the highest January prices ever recorded by the U.S. Energy Information Administration (EIA). The next highest was January 1980 ($3.30), with 2008 and 2011 close behind.

Figure 1. U.S. Retail Price of Gasoline in January only between 1976 and 2012, Adjusted for Inflation (Monthly, EIA)

 

You can find the EIA’s official numbers here. Note that EIA data on retail gasoline prices only extend back to 1976 unless you’re talking annual figures, but those don’t tell us anything about seasonal variation during the year. Weekly data only go back to 1993.

Today’s gas prices are in rarified territory, even after adjusting for inflation. 

Post a Comment 5 Comments

  • Posted by Ian

    It’s definitely interesting to see that today’s inflation-adjusted gasoline prices are essentially the same as those in ’80-’81. But it should also be noted that the average fuel economy of the light duty vehicle fleet in the early 80s would’ve been roughly 15 MPG. So from the perspective of cost per mile driven, we’ve still got a ways to go…

  • Posted by pjc

    Ian is on the right track here. It’s not the cost of gas it’s the cost of the commute that counts – measured as a proportion of your paycheck.

    The US car fleet has improved it’s MPG significantly in just the last 4 years. The current low interest rate, high oil price environment is a less artificial version of “cash for clunkers”. (I.e. you start saving money on your new high MPG car right away, since your monthly payment is so low).

  • Posted by pjc

    one should also point out that the cost of running your AC, heating your house, etc. is priced more closely with natural gas than with oil these days, and natty gas is dirt cheap

  • Posted by carl

    actually fleet mileage for passenger vehicles peaked somewhere around 1982-1984 in the 24 mpg range and has dropped since down to the 23mpg range up until about 5 years ago then rose again slightly

    http://en.wikipedia.org/wiki/Corporate_Average_Fuel_Economy

    for a better picture with less distortion though you get this:
    http://earlywarn.blogspot.com/2011/05/us-fleet-fuel-economy.html

  • Posted by pjc

    @carl

    The CAFE standards are the legal requirements for new vehicles – they aren’t an attempt to measure the mileage of the actual fleet on the road.

    Your second link looks accurate to me, and is consistent with what I said — about a 10% improvement in aggregate mileages since 2008. I call 10% in 4 years significant….

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