It’s a new campaign pledge by Republican presidential hopeful Michelle Bachmann, but a close look at the history of U.S. gasoline prices indicates that turning the clock back to $2 gasoline would bring the nation back to some brief, and not- necessarily-prosperous eras.
An interactive graphic developed by the U.S. Energy Information Administration shows that in inflation-adjusted terms, the price of gasoline was well over $2 per gallon through most of our history with motorized vehicles. From 1919, right through two World Wars and the Depression, through the post-War expansion right through the 1960s, the price never dipped below the $2.20 mark (in inflation-adjusted terms). Only amid a recession in 1970 did the price of gasoline fall below $2 for the first time in U.S. history. It shot back up again after the Arab oil embargo of 1973.
It was not until 1986 that inflation-adjusted U.S. gasoline prices fell again below $2 per gallon, and this ushered in an 18-year period of lower gas prices, which may be the epoch that Bachmann is recalling. It began due to a precipitous fall in the late 1980s in global oil prices. Prices at U.S. gas pumps, in real terms, stayed below $2 on average in the economic ups and downs that followed, through the first Gulf War and recession of the early 1990s, through the technology-led expansion of the 1990s and the recession of 2001.
U.S. gas prices climbed again above the $2 per gallon mark in 2004. Thanks to recession, they were lower in President Obama’s first two years of office ($2.47 per gallon in 2009 and $2.88 per gallon in 2010) than the $3 average in President Bush’s last four years in office.
But the inflation-adjusted price chart also conveys alarming news that explains why Bachmann views gas prices as such a potent campaign issue. In these two years heading into the election, the U.S. gas price is forecast to reach a historic high of $3.58 per gallon, surpassing the 2008 all-time high of $3.42, and the previous peak pump price of 30 cents per gallon — that’s the equivalent of $3.37 per gallon in today’s money — reached in 1920.