NCPA - National Center for Policy Analysis

Gasoline is $1 Cheaper than in 1920

April 9, 2004

The average price of a gallon of gasoline should exceed an all-time high very soon, according to government and industry analysts. Citing strong demand and tight supplies, they predict.

Average gasoline prices could exceed $1.80 per gallon within a couple of months. That is an all-time high in dollars and cents. However, if we adjust for inflation, it is not as high as it has been in the past, says former Gov. Pete du Pont, policy chairman of the NCPA.

  • In 1920, gasoline cost 30 cents per gallon; that's equivalent to $2.78 today.
  • Gasoline prices rose to $2.83 per gallon in 1981, and they did not get back below $2 until 1986.
  • In fact, real gasoline prices below $1.50 per gallon are a relatively recent phenomenon -- occurring in only 12 years, all since 1987.

If gasoline prices were at a real record high and unaffordable, consumers would drive less or buy more fuel-efficient vehicles. But the truth is consumers have recognized gasoline prices are really a bargain:

  • The cost of gasoline has been effectively cut in half by new passenger cars that average nearly 25 miles per gallon (mpg), compared to 1975 passenger cars with an mpg of 13.4.
  • Americans have responded by more than doubling the number of miles they drive annually.

They have also bought less fuel-efficient vehicles. While the number of automobiles has increased 60 percent since 1970, the number of light trucks and SUVs has increased 400 percent.

Source: Pete du Pont (NCPA), "A Bargain at the Pump," Washington Times, April 8, 2004.


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