Gasoline Prices Adjusted for Inflation

Gasoline prices are often very volatile with sharp swings in what American pay at the pump. As an example, prices for gasoline jumped over 10% in 2017 from 2016.

Average pricing for gasoline is one the major categories 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 table below shows average annual prices of gasoline (all types) and those prices adjusted for inflation in 2017 dollars. It gives insights into how prices at the pump have changed over the years and how those prices compare when adjusted for inflation.

Inflation Adjust Gasoline Prices (1978-2017)

Year Average Annual Gas Prices (In Dollars)* Average Annual CPI for Gasoline** Gas Prices Adjusted for Inflation (In 2017 Dollars)
1978 0.652 51.900 2.659
1979 0.882 70.200 2.660
1980 1.221 97.500 2.653
1981 1.353 108.500 2.640
1982 1.281 102.800 2.638
1983 1.225 99.400 2.609
1984 1.198 97.800 2.593
1985 1.196 98.600 2.568
1986 0.931 77.000 2.561
1987 0.957 80.100 2.530
1988 0.964 80.800 2.525
1989 1.060 88.500 2.537
1990 1.217 101.000 2.552
1991 1.196 99.200 2.554
1992 1.190 99.000 2.545
1993 1.173 97.700 2.542
1994 1.174 98.200 2.532
1995 1.205 99.800 2.558
1996 1.288 105.900 2.575
1997 1.291 105.800 2.585
1998 1.115 91.600 2.579
1999 1.221 100.100 2.583
2000 1.563 128.600 2.573
2001 1.531 124.000 2.615
2002 1.441 116.000 2.630
2003 1.638 135.100 2.567
2004 1.923 159.700 2.550
2005 2.338 194.700 2.543
2006 2.635 219.900 2.537
2007 2.849 237.959 2.536
2008 3.317 277.457 2.532
2009 2.401 201.555 2.522
2010 2.836 238.594 2.517
2011 3.577 301.694 2.510
2012 3.695 311.470 2.512
2013 3.584 302.577 2.508
2014 3.425 290.889 2.493
2015 2.510 212.007 2.507
2016 2.204 187.602 2.487
2017 2.469 211.770 2.469

*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.

**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 for inflation, we’ll use an example that shows how to adjust gas prices from 1978 to 2017. 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 2017 was 211.770.

The following formula shows how to adjust gasoline for inflation:

1978 Gas Price x (2017 CPI for Gas / 1978 CPI for Gas) = Adjusted Gas Price in 2017 Dollars

Using the actual numbers:

$0.652 x (211.770/51.900) = $2.66