The Good Old Days of Cheap Gas Are Now

As the graph in my post below shows, gas prices today in real dollars are about the same as gas prices back in the 1930s and 1940s, a little higher than the 1950s, 1960s and 1970s; and significantly lower than the early 1980s.

Another measure of the affordability of gas prices over time is to calcualte the cost of 1,000 gallons of gas at the average retail price in a given year as a percent of the average disposable per-captia income in that same year. Because real gas prices have remained relatively flat over the last 80 years, but real incomes have increased by a factor of about 4X since 1929, the cost of gasoline as a percent of disposable income has decreased significantly over time (see graph above, click to enlarge).

Even though gas in the 1950s sold for about 25 cents a gallon, it was about twice as expensive as in 2006, measured in the percent of disposable income to buy 1000 gallons - about 16% in the 1950s vs. about 8% in 2006. Likewise, to buy 1000 gallons of gas in 1981 was almost twice expensive (14.1%) as 1000 gallons of gas in 2006 (8.1%), as a percent of income.

If you're old enough to feel nostalgic for the "good old days of cheap gas" in the 1950s or 1960s, forget about it! The good old days of chear gas are now!