When looking at the how and why behind the current high prices of American fuel, it is essential to have a thorough background knowledge of the price of fuel at different points in history. As you no doubt suspect, fuel prices have risen greatly from the time cars were first seen on the nation’s roads to the present day.
Originally only 25 cents per gallon, the price of gasoline is much higher today than it once was. A gallon of gas is pushing the four dollar mark in modern-day America. To understand why the price of fuel is so high, take a look at the breakdown of gasoline prices in the United States discussed below.
Amazingly, at least when compared to modern-day fuel prices, a gallon of gasoline once cost only 25 cents per gallon. Part of the reason for this was that cars were such a new thing on the American landscape in 1920. Not many people were driving them then so the demand for gas wasn’t very high. In fact, in the 1920s, just after World War I had ended, most American homes, especially those located in rural areas, still didn’t even have electricity. This is telling of the overall energy use of the country as a whole during the time period. Add in the fact that the population was less than a third of what it is today and it is easily apparent that energy use and the demand for gasoline was far smaller.
Gas prices stayed almost exactly the same as they did in 1920 up and through 1945. For example, the fuel price for a gallon of gasoline was only 27 cents per gallon in 1946. Though there were far more cars on the road, nearly 34 million by government estimates, gasoline companies were still able to keep up with the massive demand for their product.
The 1940s came and went and the 1950s brought slightly higher gasoline prices – if you actually consider a 10 cent raise to 40 cents per gallons to be slightly higher. Part of the reason for the slight increase was that automobiles in particular and transportation in general became a bigger deal after World War II was over. Luckily for Americans though, gasoline companies were still, for the most part, able to keep up with the overall demand for gasoline.
To most modern-day Americans, 50 cents for a gallon of gasoline probably seems like a pretty good deal! But to the Americans of 1974, it was a totally new thing. It was the first time that United States fuel prices rose above the 50 cent mark. The increase was primarily because of the Arab oil embargo of October 1973. The oil embargo sent fuel prices through the roof and Americans started, for the first time, to realize that a lot of the components and supplies for their gasoline were being imported from overseas. This newfound realization did little to diminish the demand for gasoline though, and oil imports from overseas rose from 1.7 million barrels per day in 1971 to over 3.5 million barrels per day in 1974.
Despite a jump in gasoline prices because of the Arab oil embargo, fuel prices in the United States remained under one dollar until the early 1980s. Statistics from this time period show that one dollar was the average price of fuel from about 1981 on. A large reason for the rise in fuel prices to one dollar per gallon was that new and better cars were constantly being put on the market. The automobile industry had taken off. In addition, consumers were now offered two choices of gasoline, leaded and unleaded, and this further increased the demand for foreign oil.
It is important to note that fuel prices in the United States did not solely rise during their history. Though one dollar per gallon of gasoline was the average during most of the 1980s, the price, depending on location, fluctuated terrifically from between about 50 cents per gallon to $1.50 per gallon during the two decades that made up the 1980s and 1990s.
The global economy of early 2000 led to a steadily increasing demand for gasoline on a global scale. Countries like China and India now had a totally new need for automobiles and thus for gasoline. Americans also started to hit the roads in even greater numbers (partly because of a growth in population and partly because many families owned more than a single car). All in all, oil companies were falling behind production wise and overall fuel prices were set to rise steadily until present. Never again would gas prices be below one dollar.
In just eight years, fuel prices in the United States jumped from just $1.50 to $4.00. The global economy was growing and gas prices reflected this with enormous spikes in the summer of 2008. In addition to being the year with the highest nationwide gas prices ever, 2008 also brought an all-time high in oil imports. Approximately 10 million barrels were imported each day.
In the spring of 2011, gasoline prices in some areas of the United States jumped to a simply remarkable $5 per gallon. Though this price was far from being the national average, it is interesting to take note of. The big reasons for these high fuel prices included an increased demand for gasoline and a lack of pipelines for easy transportation.
Though fuel prices waver from day to day, the current average price per gallon of gasoline, as of 2013, is right around $3.75. In some areas gasoline can be found for as little as $3.00 and in some for as high as $4.00.
There are many reasons that it is important to study and have a basic understanding of fuel prices in the United States. The primary one is that it helps Americans analyze themselves and their need for fuel. It helps them figure out how, why, and where they are using their fuel and in which ways they can possibly limit its use. In addition, it also prompts gasoline companies and other energy giants to review their ways. At the end of the day, observing the trend of fuel prices throughout U.S. history will hopefully help keep the prices at an affordable level for years to come.