Putting $4 Gas In Perspective

Adjusted for inflation and income, drivers have paid more in the past.

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If you think paying $4 for a gallon of gas is ridiculous and long for the days when gas cost a quarter, consider this: 93 years ago you could pay just 25 cents and drive away in your Oldsmobile or Studebaker with a gallon of gas. However, adjusted for inflation Americans were paying the equivalent of $3.70 in 2011 dollars, and their income levels were hardly on par with today's average salaries.

According to the Bureau of Labor Statistics, the average household earned $1,518 in 1918, which is the equivalent of $21,644 in 2008 dollars (the second most expensive year for gas dating back to 1918). Fast forward 90 years into the future, the average household income was well above $21,644; it was $52,029, according to the Census Bureau. So the cost of gas would have consumed a much larger chunk of a family's earnings in 1918 than in 2008.

Cars in the early 20th century were also much less fuel-efficient. Henry Ford's Model T, introduced in 1908, was the first car affordable enough to attract middle-class consumers. The Model T was also the most common car on the road in 1918, and its efficiency straddled between 13 and 21 miles per gallon, so 17 on average. In 2008, the average passenger car on the road was able to travel 22.6 miles to the gallon, according to the Bureau of Transportation Statistics. New cars of course averaged even better: 31.5 miles per gallon. So traveling 50 miles to visit grandma in 1908 guzzled much more gas (and money) than the same trip in 2008. [See a slide show of the 10 priciest years for gas.]

Add in the fact that there were far fewer gas stations and thus no competition to keep prices low, then it's clear that 25-cent gas wasn't exactly a bargain.

Alternately, however, high gas prices did not affect nearly as many Americans in the early 20th century as they do today. According to the now-defunct Office of Public Roads and Rural Engineering, there were about 5 million motor vehicles registered in 1917, meaning a little less than 5 percent of Americans owned a car, truck, or motorcycle. The people burdened with the "high" price of 25-cent gas were the small percentage of the population who were able to afford cars in the first place (i.e. not the working class). Today, there are approximately 250 million vehicles on the roads, with nearly 90 percent of American households having one. So there's no question that the recent high prices (averaging $3.45 through the first four months of 2011) are tugging on far more purse strings than those of nearly 100 years ago.

The heydays of cheap gas (in terms of real money dollars) were way back in that long-ago era known as the late '90s. Prices hit rock bottom in 1998, when a gallon cost $1.07—the equivalent of $1.47 today. This was the result of a combination of higher production of crude oil by OPEC and reduced consumption by Asian nations suffering economic crises at the time. The availability of cheap gas would usher in the era of gas-guzzling SUVs, but that would be short-lived, as prices normalized over the next few years.

There are lots of things about that time period that are better left forgotten (the Spice Girls, for example), but cheap gas is something that most drivers fondly recall, and comparisons between prices then and now inevitably crop up in the minds of drivers old enough to remember (i.e. anyone 28 or older). The perception that gas is more expensive now than ever before also lingers in the minds of those too young to remember the gas shortages of the '70s and the high prices in the early '80s (those under 50).

But the main point is, high gas prices are not a 21st century problem. The price of gasoline each year from 1918 through 2010 averages just about $2.50 in 2011 dollars, and in 16 of those 93 years, gas cost more than $3.00 per gallon (adjusted). Just two of those 16 years were in the 21st century (2007 and 2008).

So while shelling out $70 to fill your tank may seem harsh, don't fret. From a historical perspective, it could certainly be worse.

  • See a slide show of the 10 priciest years for gas.