Gas Prices Not That High

Reuters (“U.S. gasoline prices soar to highest since 2008 on Russia conflict -AAA“):

U.S. gasoline prices at the pump jumped 11% over the past week to the highest since late July 2008 as global sanctions cripple Russia’s ability to export crude oil after its invasion of Ukraine, automobile club AAA said on Sunday.

AAA said average U.S. regular grade gasoline prices hit $4.009 per gallon on Sunday, up 11% from $3.604 a week ago and up 45% from $2.760 a year ago.

The automobile club, which has data going back to 2000, said U.S. retail gasoline prices hit a record $4.114 a gallon on July 17, 2008, which was around the same time U.S. crude futures soared to a record $147.27 a barrel.

The most expensive gas in the country is in California at $5.288 a gallon, followed by Hawaii ($4.695), Nevada ($4.526) and Oregon ($4.466), according to AAA.

[…]

Gasoline price provider GasBuddy said the average price of U.S. gasoline spiked nearly 41 cents per gallon, topping $4 for the first time in almost 14 years, and stands just 10 cents below the all-time record of $4.103 per gallon.

GasBuddy said that weekly increase was the second largest ever, following a jump of 49 cents per gallon during the week of Sept. 3, 2005, after Hurricane Katrina tore through the U.S. Gulf Coast.

Because the price, down to the 10th of a cent, is prominently displayed in giant font visible from the road, there is no other product where Americans are more attuned to fluctuations in cost. Since most of us use most of us consider gasoline on a daily basis and consider it a commodity, with any station’s offering just as good as the next, we’re unusually price sensitive. Many who only casually check prices at the grocery store will go out of our way to get the best price on a fill-up.

I’m certainly old enough to remember the days of $4 gas being routine and was happy when it was under $3 last year. But here’s the thing: $4 in 2008 is the equivalent of $5.27 in today’s money.

I was prepared to write a lengthy post drawing out the point but realized I already did that back in December when panic over the prospect of $4 gas was spreading. It included this graphic from Pew Research:

On the other hand, we’re actually paying more in constant dollars for gasoline now than we were during the OPEC embargo of 1973. Gas went to a shockingly high 54 cents a gallon at the peak of that crisis—which is only $3.26 in today’s dollars. That’s surprising to me.

Not being Kevin Drum, I’m not interested in spending hours crunching the numbers to create my own graphics but here’s a dated one from the Energy Department’s Vehicle Technologies Office:

In constant dollars, the 1974 shock price was only high compared to recent memory; it had been much higher in the decades prior. And the spike in the early 1980s, around the time I started to drive, was way higher as well.

Two things that jump out to me from the above calculations:

  • Retail price includes Federal and State taxes.
  • Price is for regular leaded gasoline until 1990 and for regular unleaded gasoline thereafter

The Federal tax on gasoline went from 1 cent in 1932 to 2 cents in 1951 to 3 cents in 1956 to 4 cents in 1959 and . . . stayed there until 1983, when it skyrocketed to 9 cents. And then to 14.1 cents in 1990 and 18.4 cents in 1993 . . . where it has stayed ever since. Had it kept up with inflation, we’d be paying 36.3 cents.

One would think the mandate for lead-free gasoline and, later, the corn lobby’s demand for ethanol blends would have had major impacts on the price as well but it’s not apparent from the chart. With regard to ethanol, that’s partly explainable by the fact that there was a steep discount on the gas tax for “gasahol” between 1983 and 2005, at which point both pure and blended gasoline became taxed at the 18.4 cent rate.

The constant over time is that gas prices swing wildly in response to both supply and demand shocks. How this compares to other commodities, I honestly don’t know. And, again, that’s simply because we have trained ourselves to be acutely sensitive to the price of gas in a way that we aren’t to, say, a Starbucks latte or a pound of chicken.

FILED UNDER: Economics and Business,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. MarkedMan says:

    James, given the size of your family, you have more of a right to complain about high gas prices than just about anyone. You drive vehicles that can hold a lot of people and you need to take frequent trips, ferrying various family members to activities. But the people I hear most complaining about gas prices are the single guys that bought a giant pickup truck in order to carry the occasional piece of furniture home or help someone move once every three or four years. Ditto the owners of gigantic, heavy SUV’s with massive tires and all kinds of rugged reinforcements whose actual idea of off-roading is maneuvering around a parking lot with a half inch of snow. (And by the way, such vehicles handle terribly in the snow).

    18
  2. Kathy says:

    I find it interesting that we’ve had inflation in some form for over two thousand years, and people don’t really get what its effects are.

    9
  3. James Joyner says:

    @MarkedMan: People tend to be very short-sighted. I’m old enough to remember the two OPEC embargos and to have experienced these wild fluctuations in gas prices. I remember the family replacing a 1973 Plymouth Satellite (think: Dodge Charger) with a 1979 Toyota Corrola because gas prices were so high. But we’ve all seen the rise of the giant gas-guzzling super-SUVs as prices fell again.

    I expect that my next car will be an all-electric, as I’m likely a couple of years away from a new one and anticipate that the charging infrastructure will be in place by then. We shall see.

    6
  4. OzarkHillbilly says:

    I know I’ve paid more for gas than I do now.

    Because the price, down to the 10th of a cent, is prominently displayed in giant font visible from the road, there is no other product where Americans are more attuned to fluctuations in cost. Since most of us use most of us consider gasoline on a daily basis and consider it a commodity, with any station’s offering just as good as the next, we’re unusually price sensitive. Many who only casually check prices at the grocery store will go out of our way to get the best price on a fill-up.

    I have never been cost sensitive in regard to gas and for the life of me don’t understand why anyone would. When I am shopping at the grocery store however, I tend to keep a running tab in my head as I fill the cart, and certain items will definitely get the store brand treatment (canned corn? I can’t tell the diff between Del Monte, Green Giant, and the store brand)

    The constant over time is that gas prices swing wildly in response to both supply and demand shocks.

    Hence, my lack of caring about it. I need gas, which one is convenient? There are 4 gas stations and 1 truck stop in town. I am not about to drive around looking to see which one is cheapest. In my truck I’d probably burn more gas than money I’d save. I need gas, which one is convenient?

    In fact, I just had a funny thought. If I need to air up my tires, there is one station that has free air. I’ll go out of my way for the free air every time if I need it, and I’ll fill up my tank while there even if it’s still half full just as a way of saying, “Thanx.”

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  5. grumpy realist says:

    Considering what Japanese and Europeans pay for gas, our prices are still cheap cheap cheap. Too many Americans think we have a god-given right to cheap gas, large SUVs, and living out in the middle of nowhere with all the trimmings and services of a large city. Don’t want to pay what you consider an expensive price for gas? Start walking or biking, you idiots. Turn Amish and get a horse and buggy. Or, y’know, you could just MOVE.

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  6. Slugger says:

    Our gas prices are way too high if you add in the cost of doing business with odious regimes. Our wars of the last fifty years are tied to our petroleum dependency. Petroleum has way too much power in the international order.
    A vigorous alternative fuel program is patriotic. Small cars are patriotic. E-cars are patriotic. Work from home is patriotic. Let’s get on it.

    3
  7. BugManDan says:

    @OzarkHillbilly: I don’t drive around looking for cheap gas, but I do keep track of which stations are generally cheapest and hit those when I need gas and am passing. Some stations are as much as 15-20¢ apart. That is a years worth of corn in a couple of fill ups.

  8. OzarkHillbilly says:

    @Slugger: A vigorous alternative fuel program is patriotic. Small cars are patriotic. E-cars are patriotic. Work from home is patriotic.

    QFT. Now, how do we explain it to Republicans?

    3
  9. Jen says:

    @grumpy realist:

    Considering what Japanese and Europeans pay for gas, our prices are still cheap cheap cheap.

    I wholeheartedly agree. I lived in Europe as a teen, and we travel (or used to) to the UK fairly regularly, and yes, we do pay far less for gas. We almost always get a rental car and drive when we’re in the UK, and I remember doing the math during one trip and realizing that we were paying around the equivalent of $9.50/gallon (taking both the exchange rate at the time and the imprecise conversion of liters to gallons).

    Americans love to complain.

    4
  10. That high gas prices are all Biden/the Democrats’ fault because of “pipelines” is an article of faith in many quarters.

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  11. James Joyner says:

    @BugManDan:

    I don’t drive around looking for cheap gas, but I do keep track of which stations are generally cheapest and hit those when I need gas and am passing. Some stations are as much as 15-20¢ apart.

    Same. When I can, I fill up at Costco—but only if there’s not a massive line. There’s a station right before I get on the Interstate on the way to work that’s typically 30-35 cents cheaper than average.

    Looking at GasBuddy, the spread for Regular is $4.14 to $5.27 within a 5 mile radius of me. That’s $1.13 difference! If you’re getting 10 gallons or more, that’s a fairly nice lunch’s worth of savings.

    1
  12. CSK says:

    @Jen:
    I recall being shocked at the price of petrol in Scotland and England decades ago.

    1
  13. OzarkHillbilly says:

    @BugManDan: which stations are generally cheapest

    That can pay off to some extent.

    Some stations are as much as 15-20¢ apart.

    In my experience, that never lasts for more than a day. If a station raises their prices because of reasons, the other stations soon follow because they are pressured by the same events. If a station lowers the price because of reasons, they all soon lower the price for the same reasons.

    2
  14. OzarkHillbilly says:

    @James Joyner: Reading your comment reminds me that there is a rural/urban divide in our view points. I have never even seen a Costco in the wild. Same for Sam’s Club. They have them up in STL, 70 miles away but I’m not looking for them. If I don’t buy my gas in Sullivan the next closest station is 8 miles down the road in Bourbon or 15 miles to the east in St Clair, neither of which are likely to be anything more than 1 or 2 cents lower/higher.

    1
  15. MarkedMan says:

    I just checked Fuelly and the median Tahoe driver gets 15 mpg while the media Prius driver gets 45 mpg. At $4 per gallon, a Tahoe driver switching to a Prius would be the equivalent of suddenly finding a source for gas at $1.33 per gallon

  16. Mister Bluster says:

    In constant dollars, the 1974 shock price was only high compared to recent memory;..

    It was February of 1974 when my quadriplegic friend Joe and I left Sleepytown and headed to the west coast for a four week 4000+ mile trip to Southern California, San Francisco and return. My recent memory of gas prices was of the time I spent managing a local family owned independent discount service station* in 1973. When we left gas was 39.9¢/gal. and that’s what we budgeted for. When we headed back east in mid March gas had increased to 50.9¢/gal. Yikes! A 27.5% increase if my arithmetic is correct. We never counted on that. Needless to say our beer budget suffered. Had to look for the 50¢ quarts in the clear glass bottles. Quart of beer = a gallon of gas. Damn!
    The other aggravation on our return trip was that the National Maximum Speed Law went into effect and we got to see state highway crews place new Speed Limit 55 signs along the eastbound lanes of the same Interstate Highways that we had just run westbound at 60 and 65 MPH a few weeks earlier. I tried to comply as were already short on coin and did not need a speeding ticket. But talk about draggin’ ass!

    *No self service in Illinois at the time. We pumped your gas. Checked your oil and cleaned the bugs off of your windshield. We also gave you a free pack of rolling papers with a fill up. Of course none of the college students ever had the $8 together at one time to fill up the 22 gallon gas tanks of the old beaters that they drove so we gave out the Zig Zags just for the asking.

    4
  17. DaveD says:

    I know as a whole we don’t pay that much for gas in the US. However, I will kinda say that when I recently moved down to Huntsville the only apartment that was available for rent by my start date was 17 miles away from work. I drive a civic and get pretty good gas mileage but Alabama increased our gas tax maybe three months ago due to budget short falls. The state won’t allow a bill for us to have a lottery so gas taxes seem to be their only way to increase revenue. I moved from Iowa and my girlfriend still lives there and we had cheaper gas than them until maybe last week by at least 15 cents. Gas just jumped here from the last time I filled up at 3.47 to now being 3.95. So between the housing shortage (rent went up/shortage when moving here) and now the gas price increases which also hit our energy bills this winter it is hitting people. I’m not saying the post comes off as callus but hand waving a large increase of a necessity on people who live paycheck to paycheck seems tone deaf. Yes our gas is relatively cheap but as a country most people are paid relative to the cost of living. America is built around car travel increases in gas prices hurt.

    1
  18. OzarkHillbilly says:

    @MarkedMan: Hence I try keep my trips with my p/u as local as I can. Anything more than 30 miles round trip I’m nabbing my wife’s car if at all possible.

  19. Scott F. says:

    @Steven L. Taylor:
    Because the Republicans have nothing else to offer but “Biden is doing it wrong.”

    4
  20. Mikey says:

    @Steven L. Taylor:

    That high gas prices are all Biden/the Democrats’ fault because of “pipelines” is an article of faith in many quarters.

    Texas congressmoron Dan Crenshaw tweeted negatively about Biden’s nixing of the Keystone XL pipeline, saying the pipeline would have “produced 850,000 barrels a day.”

    Well, first off a pipeline doesn’t produce a drop of oil. What Keystone XL would have done is help move 850,000 barrels of crappy Canadian tar sands oil down to the Gulf Coast where it would be refined and mostly exported.

    What it wouldn’t have done was make a penny’s worth of difference in the price of a gallon of gasoline.

    (One of the better memes I’ve seen recently was of the Gadsden flag, but with “Don’t Tread on Me” replaced by “I Don’t Know How Gas Prices Work.”)

    2
  21. JohnSF says:

    Gas Prices Not That High

    Yet.

    Looking further down the road it may be necessary to stick a horse’s head in MBS’s bed.

    2
  22. Lynn says:

    @grumpy realist: “Too many Americans think we have a god-given right to cheap gas, large SUVs, and living out in the middle of nowhere with all the trimmings and services of a large city.”

    Years ago, there was a program on public radio about the problems with urban sprawl. A self-proclaimed sprawler called in, irate as hell about the idea of limiting outward growth from cities. At the end of his rant, he added “And they should improve the highways so I can get into work faster.”

    1
  23. Jen says:

    @Lynn: Great story, right up there with a scene that happened on Oprah’s show pretty early on. The centerpiece discussion was some public policy issue, and what taxpayers were paying for said problem. This went on for a bit. When Oprah went to the audience for questions, one woman got up and asked in all seriousness “What I don’t understand is why taxpayers are paying for this–shouldn’t the government be paying for it?”

    3
  24. Just nutha ignint cracker says:

    @BugManDan: I also keep track of which stations sell gas for how much. And I always pay with my debit card so that I get the lower price–even though the difference buying 6 or 7 gallons might not even buy a can of corn (haven’t bought canned corn in 20 or 30 years and don’t know what it costs anymore). Thrift is bred in the bone.

  25. Just nutha ignint cracker says:

    @James Joyner: Wow! That’s a big range. Here, the range is about $4.11-4.39 last I looked. Earlier it was $3.79-4.39 tho, so the price at the majors may go up in the next day or two, but I’d still be surprised at over $5.

  26. JohnSF says:

    UK prices now convert to $9.2 /gallon if my maths is correct.

    1
  27. Flat Earth Luddite says:

    @Steven L. Taylor:
    apparently, I jumped the gun yesterday:

    @Just nutha ignint cracker:
    Yes, but as the guy at the neighboring gas pump reminded me this morning, loudly and repeatedly, “THIS S*** IS ALL JOE BIDEN’S FAULT!!!”**

    Unfortunately for him, his Ford F350 and 40-gallon tank is WAY more expensive to fill than your Spark or my Sonic. I know MY heart was bleeding for him (not).

    ** I understand that Pres. doesn’t control gas prices at the pump, but apparently this is too complex an idea for some people …

    2
  28. Slugger says:

    BTW, I rode with a friend who has a plug-in hybrid Toyota Rav 4. It holds enough charge for forty miles, and the gasoline engine kicks in once he exceeds the forty miles. It is uncommon for him to exceed the forty miles, and he plugs the car in every night to refresh the charge. He has a weekend place about 100 miles from the primary residence. His daily driving is almost all electric. Because of the weekend place, he does a tank of gasoline every four to six weeks. These things are built in Kentucky. Other brands are available including a Ferrari if driving a Toyota SUV seems too suburban mom for you.

    2
  29. Mister Bluster says:

    In 2008 gas here was over $4.009/gal. ($5.22 in 2022 $s) for a limited time. One place got as high as $4.509 then although I did not have to pay that much as the price went down before my next fill up.
    Today I just paid $4.199/gal. This is the price most stations are charging in town. There are other outlets that show $4.599, $4.609 and $4.699.
    So far I have not seen the lines at gas stations that were common in 1974.

  30. Franklin says:

    Took my delivery of a Tesla a few months back and couldn’t be happier to be driving past the long line at Costco. The only thing I’m topping off is Elon Musk’s ego (if that’s still possible).

    1
  31. Liberal Capitalist says:

    Great comment from the twitterverse:

    Did you ever notice that the people who whine and moan about gas price increases are the same folks that are wildly outspoken against green energy initiatives?

    2
  32. Matt says:

    @OzarkHillbilly:

    (canned corn? I can’t tell the diff between Del Monte, Green Giant, and the store brand)

    Probably because they are canned at the same factory from the same source of corn.

    I grew up in a rural farming community that had multiple canning factories and the only thing they did was swap the labels being applied to the cans.. They canned several name brands and multiple store/generic brands at both factories.

    2
  33. de stijl says:

    I drive 20 to 50 miles a month on average. I fuel up a handful of times a year, mostly. I kinda don’t care.

    Obviously, I feel for folks where this is a big deal for them. But for me, personally, it is basically immaterial.

    For me, it is the price of meat and grocery staples. That impacts me much more so.

    Apologies to you all that need to buy gasoline on the regular.

    When my current gas car dies to the point where it is no longer economical to revive it, I an buying a 2 or 3 year old EV.

    I do short trips mostly. If I need to do long drives, I rent. Why put n thousand miles on my car when I could outsource that?

    2
  34. ImProPer says:

    @Steven L. Taylor: @Steven L. Taylor:

    “That high gas prices are all Biden/the Democrats’ fault because of “pipelines” is an article of faith in many quarters.”

    I’m a bit confused, there is much anger on the right because Biden hasn’t sanctioned Russian oil and gas. I am not an energy economist, but would think this would lead to even higher gas costs, and probably a major world wide recession. I suspect this may be the reason he hasn’t yet. The originators of contemporary republican thought, like Mark Levin et al. are not confused though, they are bullish on oil, and would benefit as much as Putin with 200$ plus per bbl. Then, besides the big payday, there is the additional benefit of a world wide recession to bolster thier paranoid style politics.

  35. Scott O says:

    @Steven L. Taylor: Heard about this on the radio today, people putting stickers on gas pumps blaming Biden.
    https://marketrealist.com/p/biden-gas-pump-stickers/
    Maybe those stickerers will start blaming Putin now? I can dream can’t I?