Buzz
Have you felt the sting of high gas prices recently? As of October 4, 2023, the national average for a gallon of gasoline stands at $3.78, with a peak of $5.02 per gallon in June. It’s hard not to react with surprise, thinking, 'That much?' when you pull up to the pump. However, despite the appearance of high prices fueled by political rhetoric during an election cycle, gasoline is, in reality, cheaper than it was during many people's so-called 'good old days,' and only slightly more expensive than during the best era in US history for buying gas.
The phrase 'Gas prices are too high (and it’s someone else’s fault)' is a staple of political discourse—easy to throw around—but the actual statistics present a completely different picture.
Gas Prices and Inflation: A Comparison
When we look at gas prices in terms of actual dollars, the trend over time is quite concerning. Just refer to this chart (from the US Energy Information Administration's data):
It’s quite shocking, as Elon Musk might tweet. However, that chart doesn’t account for inflation, and focusing only on the nominal price is a deceptive approach. Gasoline costs more in actual dollars per gallon today than in 1978, when the average price was under a dollar, but each of those dollars has less purchasing power in 2023 due to inflation. Once adjusted for inflation, the gas price chart looks far more reassuring:
There are various fluctuations driven by numerous factors, and the relationship between oil price changes and inflation is a complex issue that is beyond my expertise. However, when adjusted for inflation, the charts do not show a drastic increase in gas prices.
Gas prices remained relatively stable during the 1990s, starting at $1.12 per gallon in 1990 and ending at $1.12 per gallon by 1999. This decade of price consistency was the most favorable period for gasoline purchases since the automobile was first invented. Although gasoline is slightly more expensive today than it was then, the difference is minimal.
Gasoline prices vs. fuel efficiency: The 1970s – The Worst Era for Drivers
In 1978, the typical fuel efficiency of cars in the U.S. was around 19 miles per gallon, and the average cost of gas in 2023 dollars was $4.37 per gallon. This meant that 10 gallons of gas would cost $43 and provide 190 miles of travel, or about 23 cents per mile. Fast forward to October 2023, where average fuel efficiency across all vehicles (including SUVs) stands at approximately 25 mpg, and gas costs $3.78 per gallon. This gives you 250 miles for $37, or just 15 cents per mile.
In 1992, during the period when gas was about $2 per gallon (adjusted for inflation), the average fuel efficiency of a light-duty vehicle was around 19 mpg. It cost about $20 to cover 190 miles, or 11 cents per mile. In 2023, that efficiency has improved to 26 mpg. Gas now costs 15 cents per gallon, resulting in a cost of 15 cents per mile, which is only slightly higher than the most economical driving time in recent history. Even when considering the fact that many people now choose less fuel-efficient vehicles, driving today still costs about the same as it did in the early '90s.
A comparison between gasoline prices and real wages.
When you adjust for inflation and compare the wages of workers in 2023 with those from 1992, the disparity in gasoline prices becomes almost negligible.
In 1992, during the era of affordable gas, the typical US worker earned approximately $56,684 per year when adjusted for inflation, or about $27.16 an hour. This meant it took roughly five minutes of work at 45 cents per minute to afford a gallon of gasoline, which would cover 19 miles. This translates to about 16 seconds of labor for every mile traveled.
In 2023, the average salary for a US worker is $59,428, or $28.34 per hour, which comes out to 47 cents per minute. It now takes around eight minutes of work to buy a gallon of gas that can take you 26 miles, equating to roughly 18 seconds of work per mile. While it’s true that workers today spend two additional seconds per mile compared to the '90s, there’s an option to reduce that impact by driving a hybrid—something not available back then.
