Gasoline Prices Adjusted for Inflation

Gas prices are often very volatile with sharp swings in what Americans pay at the pump. The average price for a gallon of gasoline increased to $3.477 in October from $3.361 in September, marking an increase of 3.5%. Over the most recent 2020 calendar year, the average price of gas dropped to $2.242 from $2.698, marking a 16.9% decline from 2019.

Pricing for gasoline is a major category used by U.S. Labor Department’s Bureau of Labor Statistics (BLS) in calculating inflation but their volatility is also why they are excluded when the agency calculates core inflation rates.

The chart above and table below shows average annual prices of gasoline and those prices based on inflation in 2020 dollars. Specifically, they offer insights into how prices at the pump have changed over the years and how those prices compare after they have been adjusted for inflation.

Inflation Adjusted Gasoline Prices (1978-2020)
Category: Gasoline (All types, Per gallon)

Year Average Gasoline Prices by Year* Average Annual CPI for Gasoline** Gas Prices Adjusted for Inflation (In 2020 Dollars)
1978 0.652 51.900 2.438
1979 0.882 70.200 2.438
1980 1.221 97.500 2.432
1981 1.353 108.500 2.421
1982 1.281 102.800 2.419
1983 1.225 99.400 2.392
1984 1.198 97.800 2.377
1985 1.196 98.600 2.354
1986 0.931 77.000 2.347
1987 0.957 80.100 2.320
1988 0.964 80.800 2.315
1989 1.060 88.500 2.325
1990 1.217 101.000 2.340
1991 1.196 99.200 2.341
1992 1.190 99.000 2.333
1993 1.173 97.700 2.330
1994 1.174 98.200 2.321
1995 1.205 99.800 2.345
1996 1.288 105.900 2.361
1997 1.291 105.800 2.369
1998 1.115 91.600 2.364
1999 1.221 100.100 2.368
2000 1.563 128.600 2.359
2001 1.531 124.000 2.397
2002 1.441 116.000 2.411
2003 1.638 135.100 2.353
2004 1.923 159.700 2.337
2005 2.338 194.700 2.331
2006 2.635 219.900 2.326
2007 2.849 237.959 2.325
2008 3.317 277.457 2.321
2009 2.401 201.555 2.312
2010 2.836 238.594 2.307
2011 3.577 301.694 2.301
2012 3.695 311.470 2.303
2013 3.584 302.577 2.299
2014 3.425 290.889 2.286
2015 2.510 212.007 2.298
2016 2.204 187.602 2.280
2017 2.469 211.770 2.263
2018 2.794 240.599 2.254
2019 2.698 232.003 2.258
2020 2.242 194.130 2.242

*Data Source: U.S. Bureau of Labor Statistics: 12-Month Average Gasoline, all types, per gallon/3.785 liters in U.S. city average, average price, not seasonally adjusted. CPI Average Price Data.

**Data Source: U.S. Bureau of Labor Statistics: 12-Month Average Gasoline (all types) in U.S. city average, all urban consumers, not seasonally adjusted. CPI-All Urban Consumers.

How to Adjust Gasoline Prices for Inflation

In calculating gasoline prices to adjust for inflation, we’ll use an example that shows how to adjust them from 1978 to 2020. First, consider these facts which are shown in the table above:

  • The average price for gasoline in 1978 was $0.652 per gallon.
  • The annual average CPI for Gasoline (all types) in 1978 was 51.900.
  • The annual average CPI for Gasoline (all types) in 2020 was 194.130.

The following formula shows how to adjust gasoline for inflation:

1978 Gas Price x (2020 CPI for Gas / 1978 CPI for Gas) = Adjusted Gas Price in 2020 Dollars

Using the actual numbers:

$0.652 x (194.130/51.900) = $2.44