Washington's Energy Indicators

24.  Energy Price Trends — U.S. Gasoline Prices since 1950

 
Data Note: 1998 value is an estimate based on data for January-October.

ADJUSTED FOR INFLATION, GASOLINE COSTS LESS TODAY THAN AT ANY TIME IN HISTORY. EXCEPT FOR A PERIOD OF PRICE INCREASES ASSOCIATED WITH THE OIL SHOCKS OF THE 1970S, THE LONG-TERM TREND IN GASOLINE PRICES HAS BEEN A SLOW AND STEADY DECLINE.

In the spring of 1996, U.S. gasoline prices surged from less than $1.20 per gallon in February to $1.40 by May, attracting a great deal of attention from consumers, the media, and even Congress. Two years later, it is apparent that this was a minor departure from a long-running trend of declining gasoline prices. Gasoline prices in 1998 were the lowest on record.

Except for the brief period of OPEC unity, which lasted from 1973-1985, gasoline prices have declined slowly and steadily since 1950 as new fields have been discovered and improved technology, and infrastructure have reduced the cost of extracting, transporting, and refining crude oil. Prices plunged when the OPEC agreements fell apart in 1985, and despite minor blips caused by the Iraqi invasion of Kuwait in 1990 and the unusual events of the spring of 1996, the 1990s have once again seen falling gasoline prices. Adjusted for inflation to 1992 dollars, a gallon of gasoline cost $2.03 in 1980, $1.17 in 1970, and $1.46 in 1950, as compared to $1.00 through the first ten months of 1998.

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