The chart above was created using inflation-adjusted gas prices from the Energy Information Administration from 1919 to 2008, along with the overall trend line for gas prices over the last 90 years. A few points:
1. The trend line shows that real gas prices (2007 dollars), started from a price slightly above $3 in 1919 and in general, on average, declined by a little more than 1 cent per year to about $2 in 2008. Obviously, gas prices are now way above the trend, but the general trend for the last 90 years has been steadily falling gas prices.
2. Real gas prices in 1919-1922 averaged $3.08 per gallon, higher than the average price so far this year of $2.98. And real GDP per capita today ($43,000) is about 6.5x higher than in 1919 ($6,675). In other words, adjusted for differences in real income, our ancestors in 1919 paid the equivalent of about $20 per gallon!
3. In the 69 years since 1940, real gas prices have been below the historical trend in 57 of those years and above the trend for only 12 years.
Bottom Line: Despite today's high oil and gas prices, we've had it pretty good for a long, long time, with a long-run historical, 90-year trend of a decline in real gas prices.
The chart above shows the significant increase in fuel efficiency over time, based on "miles per gallon (m.p.g.)" data from the EIA (Figure 23) for passenger cars. Compared to 1973, when the average passenger car got only 13.4 m.p.g., fuel efficiency increased to 22.9 m.p.g. by 2005, a 71% increase in efficiency in a 32-year period!