Recent history of gasoline prices - Part 1

Posted On: Saturday - September 1st 2018 3:55PM MST
In Topics: 
  History  Economics  Inflation

Long term crude oil & gasoline price history

(Sorry, not the best of graphs, but I'll explain discrepancies during the post.)

Pushing on here in this never-ending series of posts about inflation, I'd promised/threatened to write something about gasoline prices over the years. OK, look, I like graphs, that's the 1st thing. Also, I really do have a good memory for how much I used to pay for stuff, good enough to even correct the data in the graphs displayed here. They were the best I could find on short notice, and show the general trends, but they are off by a bit here and there. Lastly, the price of gasoline, at last when it's not stable for a stretch, is always a hot topic, as the reasons for wild changes can be attributed to all sorts of political goings-on. When it's up on the high side, gasoline or diesel can get to be a significant part of the family budget and change people's lifestyles.

I will just go over the recent history from my memory, with reference to the graphs (in this and the next post).

1960's through early 1970's: I wasn't at the pump during these years, as my banana-seat Stingray didn't require the petrol. However, I can remember a number of things discussed later by the folks. Gas was in the high 20 ¢ to low 30 ¢ per gallon where I lived. People would drive a few miles out of the way to save 2 cents. That was in the 7 - 10% range so why not? I'll tell you why not, sometimes: when your station wagon got 15 mpg, and you drove around for 10 minutes, ... well, I don't know.

That 0.9 ¢ at the end of the price, say 29.9 ¢/gal was significant then, though I don't know when that started (the marketing MBAs were at it even back then!), but at that point we were talking about 3 -5 %, not an insignificant amount. Now it's still $2.659/gal, not $2.65/gal. Yep, I checked recently when I filled up to an even number. The stations don't even bother to put that 0.9¢ on the signs now.

Keep this in mind through the rest of the post, if you would. It took 2-3 SILVER dimes to buy a gallon of gas a decade earlier when all the dimes were silver.

1973-4 gas "crisis": I used the quotes because the media-induced fear of the nation's running out of gas was very high in proportion to the cut-back in production by the OPEC countries (in retaliation for US support of Israel, as I recall). As I'll explain later, crude oil and gasoline prices seem to dynamically unstable. Besides the major short-term availability problem (long "gas-lines" and even odd-even-day purchasing), the price went up from that 2-decade-long-stable 20 - 35 ¢ level up toward 60 ¢/gal quickly. (The nominal price never went back down. That was the point at which families in this still-very-prosperous country had to start to take gasoline into account in their budgets.

A big change that came about from this higher price level was the Japanese capturing a significant portion of the auto. market in the US. This was partially just fortuitous, as the big 4 American automakers were geared up for building the big (gas milage, what's that?) big vehicles, the Japanese had been building small vehicles for a long time. There were 3 reasons (2 regarding gas price):

1) Taxes. The US, with it's still wonderful small-government mentality did not tax the living shit out of gasoline as most other developed countries did. The Japanese had long seen the need to drive economically.

2) Japan never had a domestic market in crude oil, so they were always dependent on imported oil, meaning paying a bit more.

3) Japan is an urban society, and was 5 x more densely-populated as California. Just as in Europe, the cars tended to be small to be useable in the packed cities.

It was really a big deal to see the Japanese cars making inroads. People needed to save money on gas, period. Though most were very patriotic in the day when Jap cars were made in Japan and American cars were made in America, this patriotism broke down. It also mattered lots that Americans were discovering the much higher quality of the Japanese cars during this period. This was still the age in which at 50,000 miles, your car had a good chance of developing major problems already. The new imports from Japan weren't like this. There was no return from this development either.

1979-80 gas "crisis" I can well remember this one. Gas went from 70 - 80 ¢/gal up toward $1.50 in a short period, maybe a few months. This was a time of high inflation in general, and Jimmy Carter got the blame. No, he didn't really help either, but with one exception to that. (More on this shortly.) This was the time of the Iranian hostage crisis. Whether that was the real cause of the oil price woes or not is not something I'm going to get into. I'll just say that the discussion of the politics of oil is just as volatile as the gasoline product.

(... will be continued in the very next post - split up for length.)

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