According to the Institute for Energy Research (IER), despite the sharp relative fall in gasoline prices, it still remains fairly expensive in a historical perspective.
The monthly average price of gasoline in December 2014 is US$2.61. Even though this is the cheapest gasoline has been since the financial crash, it is nonetheless more expensive (in real terms) than gas has typically been since 1976. Specifically, in inflation-adjusted dollars, gasoline was cheaper during the entire period from August 1985 through March 2005, almost a twenty year stretch. The only reason gas seems cheap right now is that Americans have endured very high prices (by historical standards) for the last few years.
Another way of assessing gasoline prices is to use the Consumer Price Index. Even with the recent fall, gasoline prices relative to the CPI are still much higher than they have typically been, going back to the 1950s.
Hence, although it is true that gasoline is much more affordable today than it has been in five years that is hardly consolation in the grand scheme, because the last five years have exhibited the most expensive gas (over such a long period) in at least 60 years. The recent plunge in crude oil and gasoline prices should not be interpreted as abnormal, and it certainly should not be used to justify putting a ‘floor’ under gas prices with a tax.
Adapted from a press release by Emma McAleavey.
Read the article online at: https://www.hydrocarbonengineering.com/petrochemicals/18122014/gas-historically-expensive-1806/