A Return to $2 Gas?

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.

Comments

  1. mustyo
    Ireland
    August 23, 2011, 7:59 am

    Reading this article I’m a little stunned by how ridiculously cheap petrol (or “gas”) is for people in the US. Its pretty clear that the United States needs to get real about their oil consumption. If one just looks at gas prices in the context of typical family motoring the numbers are staggering. Here in Ireland we pay on average €1.49 per litre of fuel at the moment. That’s over $8 per US gallon!!! We’ve long ago accepted that motoring is a luxury, with the environmental and financial costs that go with it. As an added example, the majority of new cars sold here are diesel powered, with economical engines of between 1.0 and 2.0 litre size. Most new cars typically deliver over 55 mpg. From what I gather, folks in the US still drive around in 3.0 litre fuel guzzlers. It seems the typical US citizen treats cheap fuel and cheap transport as a right, which is bizarre. Behaviour needs to change in the long term, and if high fuel costs help bring change about than that can only be a good thing.

  2. stimpycat
    United States
    August 22, 2011, 1:26 pm

    How would propping up our dependence on oil ever be helpful in the long term? Real prosperity will come by being on the forefront of innovative energy technology. This is an obvious ploy on Bachmann’s part to curry favor with voters. Come on, Americans are smart enough to see through this!

  3. jerry dycus
    tampa fla
    August 19, 2011, 4:12 pm

    It’s a delusion that one thinks the price of oil is going down other than short periods after higher oil price drive the economy into 5 of the last 6 recessions.

    Nor does gains in oil supply from new tech which are not even keeping up with dying fields.

    Why is the oil companies have just got 3 billion new customers.

    So watch as over the next 5 yrs oil hitting $10/gal.

    But I don’t care except for the economic crashes it will cause because I drive my EV 30 miles on $.25 worth of electric. Sadly I had to build my own because no one builds them at reasonable prices.

    But that is about to change as more EV’s get built their price will be lower than an ICE as they are more simple and battery price are dropping like a rock.

    The only way Bockman could cause it is if elected, she’d drive us into a depression with her serious lack of knowledge, idealog driven.

  4. Cranios
    Ohio, USA
    August 19, 2011, 11:51 am

    This article doesn’t examine the claim at all. All it does is show the history of gasoline prices. If the USA had $2 gas all other things held equal, it would definitely give the economy a boost.
    Sometimes I get the feeling that NatGeo just doesn’t like anyone who suggests that fossil fuels have a future, because of their nutlike obsession with the Global Warming delusion.