Gasoline Prices Headed for All-Time Lows?!

I love long-term graphs because they provide perspective often missing from the noise of the day reporting so common in the mass media and online media today.

I particularly like this graph (select the price series for "Regular Gasoline Retail Prices") from the Energy Information Administration (EIA), part of the federal government, which not only show energy prices going back nearly a century but also adjusts gasoline prices for changes in the cost of living (inflation).

The graph goes all the way back to 1919 and shows the annual average price for a gallon of gasoline. The bottom (red) line shows the nominal price of a gallon a gas. As you can see, during most of the early part of the 20th century, a gallon of gas cost about 20 to 30 cents per gallon. That sounds cheap because there has been plenty of inflation over the generations. Kids used to be able to buy candy bars for a nickel or a hot dog for a dime decades ago.

The top (blue) line on the graph shows the inflation adjusted price of a gallon of gas. Note that these inflation adjusted prices are now lower than they were in the 1920s, 1930s, 1940s, 1950s and most of the 1970s. In fact, if prices fall just another 10 percent from current levels to about $1.80 per gallon, they will be lower than at any time over the past 90 years except the period from the mid-1980s to the late 1990s! You'd never know that from all the anxiety over our supposed large energy usage and spending.