Over the last ten years, the average price of fuel has climbed steadily. Though there were some enormous spikes in price over the past four decades (like the one in early 1981 when the Iran-Iraq war started and the U.S. economy was struggling), the past decade has been a time of mostly steady increases in fuel prices, with a few brief periods where prices dropped.
Starting around the year 2000, the “dot com bubble” popped, and it was only a year later that the terrorist attacks in the U.S. occurred. Both of these events, plus typical supply, demand, and refinery issues kept prices high for a spell. Prices dropped to less than $1.50 per gallon by late 2002, but they didn’t stay low for long. The U.S. invasion of Iraq pushed fuel prices up, and a number of economic factors kept prices going up until they hit an all-time high in July 2008. At that time, gas in the U.S. averaged $4.26 per gallon.
Another respite occurred when the economy crashed in late 2008, with prices dropping below $2 per gallon for a brief spell. Though prices have not regained their July 2008 highs, they currently remain well above $3 per gallon.
What effect has this had on the typical consumer? Non-essential driving has dropped, and many more people spend their summers chilling in the ergonomic chair in their office than occupying a beach towel next to the ocean. Throw in job insecurity and it’s no wonder people are skittish when it comes to taking vacations.
While supply and demand will continue to affect average fuel prices, other factors like speculation, refinery limitations, and big weather events also have major effects on the average price that Americans pay at the gas pumps.