An article I wrote about a decade and a half ago: US GAS WATCH, addressed the concerns of rising gas prices then in the US. The summation of this was that in the mid-1990s it actually was never cheaper in America’s history to drive a car than at that time — ever. The recession, then coupled with the Gulf War, and the outrageous gas prices of $1.20(!) had raised fears of the repeat gas lines of the late 1970s.

HISTORY

The stock market crash of 1987 was unprecedented (25%). The resulting recession caused the $120 billion drop of long term savings in America, yet this would come back up to pre-crash levels by 1995. The Gulf war in 1991 caused the international embargo of Iraqi oil. This sent gas prices soaring, but they returned to previous levels when the then remaining twelve OPEC countries increased their output.
(1) Randall Chambers, CSUF Thesis, May 2008

My article has been quoted over the years in journals, reports, and other news pieces and shows that the relative cost of gas in 1920 for a Ford Model T was 15¢ a mile — when adjusted to 1994 dollars. Yet in the mid-1990s, operating a car cost just a third of that. The Model T had been the 20th design effort by Henry Ford to build an affordable automobile, and T was the 20th letter of the alphabet, yet it got poor gas milage.

Overall, the article reported that the increase of gas prices at the pump then (1994) were the new and different taxes on gasoline not the cost of oil, or processing, or markup. In fact at the end of 1979 the total tax on a gallon of gas was just 13¢, but by 1994, taxes on a gallon ranged from 21.98¢ in Georgia, to a whopping 52.91¢ in Illinois. Yet the cost of driving at the time was still just a nickel a mile.
(2) Douglas Westfall, Trailer Life, Apr 1994

TODAY

Sadly this is not the case today. At $4.50 a gallon — even with today’s fuel efficient cars and adjusting for inflation — driving a car is twice as costly as that of just fifteen years ago, and relative gas prices are up 250%. True, the political instability of OPEC nations is one of the two major causes, but the other is the massive increase in oil demand world wide — something we can do little about, other than here at home in America.

In 1993 sweet crude was going for under $20 a barrel. With 42 gallons in the barrel, that’s a little over 45¢ a gallon. Today, oil is $140 a barrel and at the current inflation rate, more than double that of 15 years ago. The answer is simple: demand. US manufacturing going off shore at an increasing rate and the industrialization of even more countries, contribute significantly to that oil demand. Note that the overseas manufacturers of our products are using oil at an alarming quantity.