Are gasoline prices as low as they feel?

Is the price of gasoline really low or does it just feel that way?

In parts of the Twin Cities area, it’s not hard to find regular unleaded for $1.97, which feels almost like the days when gas stations gave away a free set of steak knives with a fill-up.

But they’re not really that low — at least not as low as they feel — or so the Wall St. Journal  claims today.

In 2012, the national annual average for a gallon of regular unleaded gas—the yardstick for gauging prices—hit a high of $3.77, capping a series of years in which the average exceeded $3 a gallon. Before that, the last time the average was so high was in the early 1980s when, adjusted for inflation, it topped $3.60.

That’s why today’s prices feel so affordable. On New Year’s Day, the national daily average was $2.23 a gallon, according to Gas Buddy, a website that publishes real-time prices, and in many places the cost was substantially lower. Nearly 30% of the 130,000 vendors tracked by Gas Buddy across the country, or about 38,200 stations, were selling gas for less than $2 a gallon.

But the lowest prices today don’t match the bottom-of-the-barrel prices of the past 40 years and it isn’t likely the current prices will stay low as long.

Actually, they do, however. The inflation-adjusted price for the $1.19-a-gallon gasoline in 1990 is $2.15 in today’s dollars.

In fact, on this date in 1994, the average price of gasoline was $.99, the last time the average price would be that low. That’s $1.58 in today’s dollars. For more than half the decade gasoline hovered between $1.04 and $1.10 ($1.66 today), according to the Energy Information Agency. It dropped to $.88 at this time in 1999 ($1.26 today), but that was pretty much a fluke.

Consider this charge from inflation.com.

Now how low do the current prices feel?

Related: As gas prices keep changing, Americans keep adjusting to the wild price swings (The Kansas City Star).

Why oil prices keep falling — and throwing the world into turmoil (Vox).

  • Dean Carlson

    They feel pretty dang low. If politicians were smart (heh) they would immediately raise the gas tax 10 cents per gallon. No one would even notice and the State would suddenly have millions more $$$ for roads, bridges, and transit.

    • I think that’s Dayton’s plan but the gas tax won’t provide any money for tranit as it is constitutionally dedicated to roads and bridges — a tribute to the ongoing stupidity of Minnesota to budget via its constitution.

      So he’ll have to raise the sales tax for transit.

      • If the state raises the sales tax on gasoline at the wholesale level, is that constitutionally dedicated to roads and bridges as well? Or is that just for the excise tax (what we all call the “gas tax”)?

        • Those would also only go to road and bridges.

          This idea was tried in the ’13 session and the additional plan was a boost in the 7-county metro sales tax.

  • joetron2030

    I recently (in the last few days) returned from vacation in Honolulu where regular unleaded is about $3.50 per gal. Today, I paid $2.30 per gal of PREMIUM. It may be colder here, but the gas is definitely cheaper. Not sure which I’d prefer, though. 😉

    My friend that lives in Honolulu commented that people were ecstatic when the price per gallon dropped below $5 or $6 per gallon (I don’t recall which it was now).

    Also, in Honolulu, the gas pump handles don’t have that little latch that let you fuel your car up without holding the handle the entire time. A minor annoyance but an annoyance all the same.

    • Everything in Hawai’i costs more than it does on the Mainland. (A dozen eggs cost ~$4; boneless chicken breasts are almost $6/lb.) Fuel is no exception. It’s been that way as long as I can remember … and I first visited Hawai’i in 1968, when TV shows were still broadcast a week after Mainland viewers saw them. It has nothing to do with politics, and everything to do with location and lack of natural resources.

      • joetron2030

        I’m well aware of that.

  • Emeraldeye

    I found this, unintentionally mind you, misleading as it only mentions inflation. Keep in mind that a good part of inflation is based on energy prices. I would have liked to have seen the investigation pegging prices to the cost of a barrel of oil at each price point. For years, and each time they are investigated, oil prices are defended because the cost of a barrel of oil is higher and that increased cost worked its way up the food chain (especially in Food and Transportation of goods). Now that the cost of a barrel of oil is dropping, it would be good to see direct comparisons of pump prices to barrels of oil then and now. In theory, we should start to see deflation due to lower energy costs, it the price we pay at the pump is truly tied to the cost of a barrel of oil.

  • Gallie

    Is this trend expected to continue? If gas prices stayed lower, it would sure be nice. I’d probably take a few more drives and have a little more money to spend at the grocery store.

  • Dave

    “it isn’t likely the current prices will stay low as long”

    Uh-huh. Nobody has ever wrongly predicted gas prices.