Inflation Adjusted Gasoline Prices (2023)

Without looking at inflation-adjusted prices it is difficult to see where gasoline prices actually stand. Back in 1918 gasoline was $0.25 a gallon and by 1932 prices had fallen to 18 cents a gallon! But as we all know over the last 100 years the purchasing power of the dollar has fallen drastically. So, in order to get the true picture, we can’t just say that the lowest price of gas was 18 cents per gallon, we need to adjust the price for inflation. When adjusting for inflation there are two prices… the first is called the “nominal price” and that is the actual price you would have paid for gas at the pump i.e. 18 cents. The key price though is the inflation-adjusted price which calculates what the price would have been if we were spending current dollars on a previous date. In this case, we are basing our calculations on the value of a dollar in April 2022.

Inflation Adjusted Gasoline Prices (1)In other words, imagine taking today’s dollars and jumping into a time-traveling DeLorean and going back to a specific date in time. As you travel back in time, each dollar you bring with you shrinks based on the equivalent purchasing power of that time. The inflation-adjusted price (aka. the price in “real dollars”) is how much you would have to pay back then, using the weakened purchasing power of today’s dollar. So if overall prices have doubled over a specific time period it would take two inflation-adjusted dollars to buy something that only cost one dollar, back then.

Lowest Inflation-Adjusted Price of Gasoline–
$1.80 in 1998

DateInflation-Adjusted Lows

Looking at the table above it is interesting to note that both 1972 and 2016 bottomed at roughly the same inflation-adjusted price even though the nominal price was drastically different.

If we look at the chart below we see that in inflation-adjusted terms, the first low occurred in 1931 as nominal prices fell from 30 cents a gallon in 1920 to 17 cents in 1931. Thus in 11 years prices fell 43%. But we have to remember that 1931 was the beginning of the “Great Depression” and overall prices fell 24% during the same period. As we can see gasoline prices fell much more than prices in general in the early portion. It is noteworthy that in 2016 prices for gasoline on an inflation-adjusted basis were actually much lower than they were during the Great Depression.

Since 2016, prices ticked up a bit but then made another bottom in 2020. Although as of this writing gas prices are well over $4/gallon nationwide and over $6.00 in California. The nationwide average for Regular gasoline for 2022 so far is “only” $3.77 (but it is still early).

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Gasoline in the Great Depression

During the remainder of the 1930s inflation-adjusted prices rose to the equivalent of $4.10/gallon in 1938 with the nominal price of 20 cents a gallon. The rise in inflation-adjusted prices is actually due to overall deflation making the adjusted price look higher even though the nominal price remained the same. In 1929, gas was 20 cents a gallon and it fell to 17 cents a gallon in 1931 before climbing back to 20 cents a gallon. Of course there were some regional variations in price and 20 cents was the average.

(Video) How gas prices and inflation could impact midterm elections

Gasoline Prices in the 1940s -50s

In 1940, nominal prices dipped back to 18 cents a gallon bringing the inflation-adjusted price down to $3.72. From there, gasoline prices actually rose but inflation rose faster due to WWII so the inflation-adjusted price of gas appeared to fall, but due to war-time rationing gasoline was not always available at that price. The next bottom occurred in 1947 as inflation-adjusted prices had fallen to $2.98, with nominal prices back up to 1926 levels of 23 cents a gallon.

By 1949, just two years later, nominal prices had climbed to 27 cents a gallon (a 17% increase) and inflation-adjusted prices were $3.28/gal. From 1950 through 1959 nominal gas prices climbed from 27 cents a gallon to 30 cents a gallon with a brief stop at 31 cents a gallon in 1957. But over the same period, overall inflation climbed faster so the inflation-adjusted price actually fell from $3.24in 1950 to $2.98in 1959.

Gasoline Prices in the 1960s -70s

From 1960 through 1965 nominal gas prices bounced between 30 and 31 cents a gallon while the inflation-adjusted price fell from $3.03 to $2.85. But then the nominal price of gas started to climb and by 1970 had increased 20% to 36 cents a gallon but on an inflation-adjusted basis, gas prices had actually fallen to $2.68. And by 1972 gas on an inflation-adjusted basis was a real bargain at $2.49a gallon.

At this point, OPEC felt they were being cheated as the value of the dollars they were receiving were becoming worth less and less. So they started squeezing prices, which drove nominal prices in 1981 up to $1.35 and inflation-adjusted prices up to $4.29. Note that this price was higher than the price during 1934 and 38 but below the 1918 price.

From there nominal prices fell moderately over the next 17 years and inflation itself moderated falling from 13.5% in 1980 to 1.86% in 1986 and then increasing to 4.82% in 1989. This resulted in drastically cheaper gas on an inflation-adjusted basis with the lowest recorded inflation-adjusted price for gas occurring in 1998 at $1.80 per gallon.

In 1998, overall price inflation made it look like gasoline prices were rising, so most people didn’t realize that gas was actually cheap on a historical basis. But they knew it intuitively since a smaller portion of their budget was going toward gasoline. In fact, gas had gotten really cheap by historical standards allowing people to buy gas guzzlers like SUV’s and Hummers.

(Video) Why gas prices aren’t actually at record highs

Gas Price Peaks

DateInflation-Adjusted Highs

Note: Remember these are annual average prices for regular “conventional” motor fuel. Some states require “reformulated” fuel which would cost more. Some states also impose higher than average taxes on gasoline and so prices will be higher in those states. Also, Mid-grade and Premium fuel will also cost more. Plus since these are “annual average” prices, half of the year prices will be higher and half the year prices will be lower (sometimes with considerable variation over the 12 months).

On an annual average inflation-adjusted basis, gasoline prices have tended to peak in the same range over the entire 96-year price history. Back in 1918 as gasoline was just entering commercial production prices were at their peak at $4.79but as refining capacity improved prices began to fall (in both nominal and inflation-adjusted terms).

In the early 1930s demand for gas fell and so did prices but as overall deflation took hold the inflation-adjusted price peaked at $4.10 in 1934 & 1938.

The next peak occurred during the mid-1930s and then there was a long period of relatively low gas prices so the rapid increase in the late 1970s was a major (and somewhat artificial) shock to most people who saw nominal prices rocket above $1.00/gal. for the first time ever. Most did not realize that on an inflation-adjusted basis the last time prices were this high was during the Great Depression (not that the thought would have brought much comfort).

Recent Gas Price Action

Over the next 20 years, people in the United States once again got used to low gasoline prices. And then from 2002 to 2008 prices for gas once again climbed to previous peak levels on an inflation-adjusted basis. From there the stock market crash brought some relief in gas prices as virtually everything fell in price. But relief did not last long and by 2012 gas prices were once again at peak levels.

In late 2014, OPEC started a “price war” in response to the United States’ increased production due to fracking and prices fell drastically. In 2016, prices fell below the 1931, 1947, and 1972 lows 9in inflation adjusted terms). In the ensuing years, increased production due to fracking allowed the U.S. to become energy independent and the biggest oil and natural gas producer on the planet. An interesting article by NPR: How An Engineer’s Desperate Experiment Created Fracking.

(Video) National average gas prices creep closer to $5 per gallon

Biden’s Impact on Gas Prices

On his first day in office, Joe Biden halted completion of the Keystone XL pipeline via Executive Order. Ironically, the Keystone XL would have been the world’sfirst zero-emission energy pipeline.Simultaneously, he placed a “temporary” ban on drilling in ANWR which would have increased the use of the Alaskan pipeline.His Executive Order also halted energy development on federal landandshut down the 80 million-acre oil lease sale putting the Louisiana oil and gas industry in danger. So with the stroke of a pen, he eliminated U.S. energy independence.

The oil and gas business is a very capital intensive business, and huge amounts of new capital are required to explore and drill for oil. But due to the anti-oil and gas policies of the Biden administration, large banks and other investors are reluctant to risk capital on oil exploration since the project could be halted mid-stream by government fiat.

Instead of buying oil from friendly neighbors like Canada the Biden administration is courting countries like Saudi Arabia, Venezuela and Iran, placing the U.S.’s energy situation on an even more unstable footing.

Russian Oil

To make matters worse, these costly policies were followed by Russia’s invasion of Ukraine. Russia is the world’s third largest oil and gas producer, producing about 10 percent of the world’s oil and 40 percent of Western Europe’s natural gas. So, when the West embargoed Russian oil it drastically reduced available supply for Western Countries.

The obvious result has been skyrocketing gas prices.

The average inflation-adjusted gasoline price since 1918 in “April 2022 dollars” is $3.20so whenever inflation-adjusted gasoline prices were above $3.20 they were “high” and whenever prices were below $3.20they were “low”. From the table below we can see that 2014 had above-average prices, then every year through 2021 gasoline prices have been “below average”.

YearNominal Price

Inflation- adjusted Price

(Video) US Gas Prices Explained | Storyful Explains

2022 (Partial Year)$3.35$3.82


When we look at gas prices from our own personal perspective we only see a small window of 4 or 5 years at most. Rarely do we even consider a 10-year time frame. Therefore, we might assume that gas prices “always go up.” But if we look at the big picture in inflation-adjusted terms we will get quite a different picture, as we can see from the chart above. Yes, the black “nominal price” was continually rising through about 2006 but even in nominal terms from 2012 through 2020, we saw a pretty significant decline.

If we look at gas in inflation-adjusted terms, except for a few short-term spikes, it was actually trending downward from 1918 through 1972. Which is to say that the cost of living based on other things increased in price more than gasoline over that period. From 1972 through 1981 prices moved up sharply, and by 1980-81 everyone was suffering from sticker shock as nominal gas prices rose above $1.00 for the first time, but then gasoline resumed its downward trend.

Due to pressure from the Arab oil embargo, from 1970-1980 gasoline regained almost all it had lost over the previous 50 years. Then from 1980 – 2000 gasoline fell to new lows on an inflation-adjusted basis. But from 2000-2006 gasoline caught back up with other prices and was back where it was in 1918. Then the 2008 recession hit and world-wide demand slowed and prices fell sharply but quickly rebounded with fears of “peak oil”.

But then technological improvements due to hydraulic fracking allowed the price to drop both in nominal and inflation-adjusted terms, although overproduction caused a reversal in 2016. Since then the industry has leveled out and prices have stabilized. Over the longest term, we can see that the linear regression line has actually been trending down since 1918.


Average Nominal
Gasoline Price/Gal

Inflation Adjusted Gas Prices
Adj. for April 2022

Data Sources:

(Video) Gas prices spike over the Memorial Day weekend

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Inflation Adjusted Gasoline Prices? ›

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YearAverage Gasoline Prices by Year*Gas Prices Adjusted for Inflation (In 2021 Dollars)
40 more rows

What is the highest gas price in history? ›

If only life were like that. As it stands, the average price for a gallon of gasoline in the United States right now is $4.865, according to AAA. That's a new all-time high not only on a national level but in all 50 states. The new high eclipses the previous record of $4.103 set in 2008.

What was the lowest gas price in history? ›

Gas Prices Through History

gas was only 36 cents per gallon in 1970!

Is gasoline part of the CPI? ›

Gasoline prices are so much more volatile than other CPI components that, even though gasoline makes up less than 6 percent of the CPI, it is often the main source of monthly price movements in the all items index.

Why were gas prices so high in 2008? ›

In June 2008 U.S. energy secretary Samuel Bodman said that insufficient oil production, not financial speculation, was driving rising crude prices. He said that oil production had not kept pace with growing demand.

How much will gas be in 2030? ›

The agency also forecast a potential drop to $3.27/MMBtu in 2025, followed by a rebound to $4.26/MMBtu in 2030.

How much was gas in the 60s? ›

Supporting Information
YearGasoline Price (Current dollars/gallon)Gasoline Price (Constant 2011 dollars/gallon)
80 more rows
Aug 20, 2012

How much was gas during the 1970s gas crisis? ›

In 1973, a gallon of gasoline along U.S. Highway 61 cost 25 cents. You could fill your Volkswagen bug for $2.50. Less than a year later, that same tank of gas cost $3.60. By 1979, a gallon of gas had climbed to 72 cents a gallon.

What did gas cost in 1962? ›

Supporting Information
YearRetail Gasoline Price (Current dollars/gallon)Retail Gasoline Price (Constant 2015 dollars/gallon)
84 more rows
Mar 7, 2016

How high did gas prices get in the 70s? ›

In the summer of 1973, the first signs of a looming gas crisis appeared in Lancaster County. In those days, paying even $1 for a gallon of gas was inconceivable; news stories focused on the price hike from 38 to 39 cents per gallon.

Is gasoline included in inflation rate? ›

Gasoline is an important category reported within the BLS's monthly report on consumer inflation, the Consumer Price Index (CPI).

Does inflation affect gas prices? ›

Inflation continues to rise, gas prices up nearly 50% since last year.

Is fuel included in inflation? ›

Key Takeaways. Core inflation is the change in the costs of goods and services but does not include those from the food and energy sectors.

Why was gas so cheap in the 90s? ›

Global output continued to push prices down in the early 1990s. In inflation-adjusted dollars, gasoline at points during the decade was cheaper than it had been since the federal government started keeping track in 1929.

Why was gas expensive in 2012? ›

AAA blamed hurricanes, refinery outages and tensions in the Middle East for the high prices. The third most expensive year on record was 2008, when prices averaged $3.25 a gallon.

Why did gas prices go up in 2011? ›

On March 7, 2011, the average price of gas having reached $3.57, individuals were making changes in their driving. The weakened U.S. Dollar resulted in a spike to $112/barrel with the national average of $3.74/gallon – with expectations of damaging the U.S. economy suggestive of a long-term recession.

What will gas be in 2025? ›

For the gasoline price forecast in 2025, Rzechorzek projected the fuel could trade at $2.28/gal.

How high will gas prices be in 2025? ›

Gas Price Prediction
YearsAvg PriceHighest Price
August 2025$22.548$24.126
September 2025$23.081$24.697
October 2025$23.614$25.267
November 2025$24.147$25.837
8 more rows

What will gas cost 2023? ›

If the EIA is correct, the expected cost for gasoline in 2023 is #$3.66 per gallon, and $97.24 per oil barrel.

How much was gas in the 1920? ›

Throughout the 1920s, gas prices averaged 21 to 30 cents per gallon.

How much was a gallon of gas in 1973? ›

The U.S. Department of Energy reports the average price for a gallon of gasoline in 1973 was 39 cents, but in 1974, it rose to 53 cents. There were long lines and panic buying at gas stations as Americans were shocked to see gasoline shortages during the embargo.

How much was gas 1978? ›

In 1978, the average price of a gallon of regular unleaded gasoline in U.S. cities ranged from 65 cents to 71 cents.

How long did the gas shortage last in 1973? ›

It had a stockpile good for 55 days, and another 20-day supply was en route. Facing its most serious crisis since 1945 the government ordered a 10% cut in the consumption of industrial oil and electricity.

Why was there a gas shortage in 1979? ›

in 1979. American consumers were told that the cause of the crisis was a decline in Iranian oil production from 5.8 million barrels a day (mmbd) in July 1978 to 445,000 barrels a day (mbd) in January 1979.

Was there a gas shortage in the 80s? ›

The gasoline shortage also led to fears that heating oil might be in short supply through the 1979-1980 winter. This prospect was especially concerning for New England states, where demand for home heating oil was the highest.

When did cigarettes cost 50 cents a pack? ›

In 1999, California became a high profile testing ground for these potentially conflicting effects when it implemented a $0.50/pack voter approved cigarette tax increase, which was associated with a corresponding retail price increase that made the price of cigarettes significantly higher in California than in the ...

What was the price of gas in 1930? ›

In the early 1930s, an American motorist could pull up to the pump in a Ford Model T Speedster running on fumes, and for little more than a dollar drive away with a full tank. Today, the same amount of gasoline costs about $25. Inflation is the primary reason for the increase in gas prices over time.

What was the price of gasoline in 1929? ›

Comparing US gas prices throughout history

In January of 1929, the cost at the pump was 21 cents per gallon of gas. When adjusted for inflation using the value of the U.S. dollar in 2022, that cost was equivalent to $3.48 per gallon today -- which is higher than our average cost was one year ago.

What year was the highest gas prices in the US? ›

With little end in sight to the ongoing energy crisis, it seems to be only a matter of time before the historical record for a gallon in the US is beaten: in July 2008 the price of gas hit $4.14 per gallon, which when adjusted for inflation would be around $5.37 in today's dollars.

When was gas most expensive in the US? ›

American drivers had it rough back in 1981. The average price of gasoline spiked to $1.353 a gallon that year — up from $1.221 in 1980 and more than double the price just three years earlier. Adjusted for inflation, the average price of gas in 1981 would have equaled $2.421 a gallon in 2020.

What were gas prices in 1964? ›

Supporting Information
YearRetail Gasoline Price (Current dollars/gallon)Retail Gasoline Price (Constant 2015 dollars/gallon)
83 more rows
Aug 31, 2015

What is included in inflation calculation? ›

The Bureau of Labor Statistics (BLS) calculates CPI inflation by gathering spending data from tens of thousands of regular consumers around the U.S. It tracks a basket of commonly purchased goods and services, including things like food, gasoline, computers, prescription drugs, college tuition and mortgage payments, to ...

What is the official inflation rate for 2021? ›

Since figures below are 12-month periods, look to the December column to find inflation rates by calendar year. For example, the rate of inflation in 2021 was 7.0%.

What is fuel inflation? ›

uncountable noun. Inflation is a general increase in the prices of goods and services in a country.

What happens to oil prices during inflation? ›

higher inflation tends to lead to higher oil prices. In the longer term, if the Federal Reserve raises interest rates and slows economic growth to control inflation, oil prices could decline as a result.

Can prices go down after inflation? ›

Consumers should get used to higher prices on goods and services. Once those prices rise, the new prices typically stick. Easing inflation doesn't mean prices will drop. It just means prices aren't rising as fast.

Why is inflation so high 2022? ›

In the US, the Consumer Price Index rose 6.8% between November 2020 and November 2021, spurred by price increases for gasoline, food, and housing. Higher energy costs caused the inflation to rise further in 2022, reaching 9.1%, a high not seen since 1981.

Who benefits from inflation? ›

Inflation means the value of money will fall and purchase relatively fewer goods than previously. In summary: Inflation will hurt those who keep cash savings and workers with fixed wages. Inflation will benefit those with large debts who, with rising prices, find it easier to pay back their debts.

What is the rate of inflation from 2021 to 2022? ›

Chained inflation averaged 6.01% per year between 2021 and 2022, a total inflation amount of 6.01%. According to the Chained CPI measurement, $1 in 2021 is equal in buying power to $1.06 in 2022, a difference of $0.06 (versus a converted amount of $1.09/change of $0.09 for All Items).

What is core inflation right now? ›

Core inflation excludes certain items that are known for their volatility — namely, food and energy. (Read more about core inflation.) It is monitored almost as much as the bellwether inflation rate that measures pricing changes across all items.
United States Core Inflation Rates (1957-2022)
ElementCore Inflation Rate
7 more rows

Why was gas so high in 2005? ›

Natural gas prices have reached historically high levels. The hurricanes worsened the underlying tightness of supply and demand. By shutting in a significant part of the Nation's production for the year, supply tightened.

Why were oil prices so high in 2008? ›

The spike in oil prices in July 2008 came at the tail end of a decade-long energy crisis. Surging demand from developing economies, stagnant production, financial speculation, and tension in the Middle East caused oil and gas prices to steadily climb over the 2000s.

Who has the cheapest gas in the world? ›

Here's who has the cheapest gas on the planet.
  • Venezuela - $0.08.
  • Libya: $0.12.
  • Iran: $0.20.
  • Syria: $1.08.
  • Algeria: $1.19.
  • Kuwait: $1.29.
Jun 17, 2022

When was gas 2 dollars a gallon? ›

When was the last time gas was under $2 a gallon? The last time the average price of gas was less than $2 was 15 years ago, in 2004.

What was the highest price for gas in 2012? ›

U.S. gasoline prices peaked at 3.62 U.S. dollars per gallon in 2012.

How much was gas a gallon in 2011? ›

The average gasoline price in 2011 was $3.52 per gallon, up from $2.78 per gallon in 2010 and $2.35 per gallon in 2009.

Why did gas prices go up in 2014? ›

The highest price that AAA recorded in 2014 was approximately $3.70 per gallon on April 28. But why are gas prices so high right now? Multiple factors are contributing to the increase, including conflict between Russia and Ukraine and the demand for oil products. AAA said on Feb.

Why did oil spike in 2014? ›

Price trends leading up to the summer of 2014

1 In addition, conflict-related production disruptions in parts of the Middle East and Africa coupled with sanctions imposed on Iran kept 1 million barrels of petroleum a day off the world market.

Why was oil so expensive in 2012? ›

Crude oil prices peaked early in 2012

Crude oil prices rose during the first quarter of 2012 as concerns about possible international supply disruptions pushed up petroleum prices.

What was the highest gas price in the United States? ›

Prices are generally highest in the West, with gas at $5.54 in Washington and Oregon, $5.31 in Arizona, and more than $5.50 on average in Alaska and Hawaii. Only one state east of the Rockies has an average gas price above $5.30 a gallon: Illinois, where the average price is $5.56.

When was gas 2 dollars a gallon? ›

The last time we saw a sustained period of gas below $2 per gallon was all the way back in 2004. According to AAA, the average gas price in America fell to $1.97 on Tuesday, continuing a downward trend that's been going on for weeks. One month ago, the average price for gas in the US was $2.45.

Where is the most expensive gas in the US? ›

Mendocino, California, holds the record for having the most expensive gas in the United States, coming in at a whopping $9.60 per gallon, Deseret News previously reported.

What were gas prices in 1964? ›

Supporting Information
YearRetail Gasoline Price (Current dollars/gallon)Retail Gasoline Price (Constant 2015 dollars/gallon)
83 more rows
Aug 31, 2015


1. Oil companies behind in production | Why are gas prices so high?
2. Oil Prices, Gasoline Prices and Inflation Expectations by Prof. Lutz Kilian
3. Why Gas Got So Expensive (It’s Not the War)
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4. WATCH LIVE: Why are gas prices so high?
(PBS NewsHour)
5. Biden adviser grilled on when gas prices will come down
(Fox News)
6. Florida, US set new gas price records — again
(WKMG News 6 ClickOrlando)
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