Adjusted for inflation, today's gasoline prices are not much higher than they have been in the past.  For this reason, now is the time to begin a federal tax shift from income to non-renewable energy.  Let's add 10 cents/year for 10 years to the federal gasoline tax and a similar amount to other non-renewable fuels (BTU basis).  (Where did this amount come from?)

The additional federal revenue would be used to lower income taxes so total federal tax revenue remains the same.  Because of the regressive nature of energy taxes, citizens with lower incomes that pay no taxes or receive a credit, would receive a larger credit/refund for the additional energy taxes paid.

Adjusted for inflation, how much does gasoline cost today compared with the last 20 years?  From DOE's Energy Information Administration, the average retail price of gasoline in the U.S. today is $2.98 per gallon (week of 7/09/07).

Here's a chart of gasoline prices going back to 1918.  It shows nominal gas prices (the actual average annual gas price) and inflation adjusted prices (price in 2007 dollars).  From 1987 to 1996, the average nominal price (the price paid) was $1.10.  From 1997 to 2007, the average nominal price was $1.62.  Of course it feels like today's gas prices are sky high.....

They're not.  Adjusted for inflation, gasoline was about $1.70 from 1987 to 1996, $1.75 from 1997 to 2007, and over $3.00 in the early 1980's.  In the 1940's thru 60's, gasoline was about $2.20 in real dollars (even though it was a little over $.30 per gallon retail).

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Most importantly, when gasoline is $5 per gallon, what will we wish we had done when it was $3.00 per gallon?


P.S. - in U.S. dollars per gallon, what are other countries paying for gasoline?
 
  -- March 2005 --

  Amsterdam, Netherlands       $6.48
  Milan, Italy                                  $5.96
  London, United Kingdom       $5.79
  Paris, France                             $5.54
  Tokyo, Japan                             $4.24
  Brasilia, Brazil                           $3.12
  Taipei, Taiwan                           $2.84
  Johannesburg, South Africa   $2.62
  Moscow, Russia                       $2.10
  Riyadh, Saudi Arabia                $0.91
  Caracas, Venezuela                 $0.12