Good Question: How Do Gas Prices Compare To 20 Years Ago?
MINNEAPOLIS (WCCO) -- Across the country, gas prices are the lowest they've been since 2009. Right now in Minnesota, a gallon of regular unleaded gasoline goes for an average of $1.90. That's down 50 cents from what it was a year ago.
But, over the long haul, it's a different story. So, how do these prices stack up over the past 20 years? Good Question.
According to Akshay Rao, a professor of marketing at the Carlson School of Management, he says we are close to an all-low time in gasoline pricing.
"The forces that are driving this are fairly. It's supply and demand," he said. "The demand for oil has declined because the Chinese economy has slowed down and the supply has increased because U.S. production has increased."
The Department of Energy keeps a historical record of gas prices dating back to 1929. It measures the average price of gas on Aug. 25 of every year.
In 1995, gas was $1.15 per gallon, which would be $1.62 per gallon in 2013 dollars. By 1998, it has dropped to $1.08 per gallon before slowly creeping up in the early 2000s.
"In the early 2000s, we had some geopolitical issues happening. We had conflict in the middle east," Rao said. "Today, the likelihood of war with Iran has declined so that has also contributed to the lessening of anxiety with respect to the supply of oil."
In 2008, gas prices took a dive due to the U.S. recession, but Rao says prices didn't fall dramatically. Gasbuddy.com reports the low was $1.59 per gallon in December 2008 before jumping back to $2.35 per gallon in August of 2009.
"It wasn't as if it dropped to the one dollar level because of the recession," he said. "The recession hit us more than it did in places like India."
Gas prices hit a peak in Minnesota in May 2013 at $4.28/gal before falling to current prices. And, as for whether anyone can predict prices will fall or rise again, Rao says it's very hard to predict.
"We need to be clear, we are dealing with a finite resource," he said. "There are short-term market forces at play that are driving prices down, but if not in the next few months, certainly in the next few years, we're going to see an increase in the price of oil and, consequently, gas."
