Is the Pump Really That Painful?

With oil prices hitting new highs on a nearly daily basis (having soared hundreds of percent higher over the last few years), lament over energy costs has taken center stage in the political fracas.  Now that the average price per gallon has crossed through $4.00, it's nearly impossible to get through an evening newscast or a Presidential stump speech without hearing about the devastating cost of fueling up.

$100 fill-ups are bound to leave motorists sticker-shocked, but has the fuel component of the real cost of driving really changed all that much?

Nominally speaking, yes.  From 1990 to 2008 (the period over which the government data is readily available), the average price per gallon of regular unleaded gasoline increased 159% (blue line).  But over those 18 years, average fuel efficiency improved by about 11%.  So the average cost per mile driven would have increased not by 159%, but closer to 134% (red line).

But that increase refers to nominal (non-inflation-adjusted) dollars.  Adjusting for nearly two decades of inflation, the real fuel cost per mile has increased just 43% (green line).

By those estimates, if your family drives 15,000 miles this year, your annual fuel bill will be $677 higher (in 2008 dollars) than if real, efficiency-adjusted prices had remained constant since 1990, when gas averaged $1.30 per gallon.

For comparison, the average family received roughly $800 through the 2008 tax rebate, more than offsetting the effective increase.