Gas Prices in 1978

The average price rose 2.2% in 1978, to $0.66 a gallon. Adjusted for inflation it fell 5.1%, to $3.24 in 2025 dollars, the lowest real price since 1973. General inflation was rising faster than the price of gasoline.

The events that ended this period began during the year. Strikes and unrest in Iran, then one of the largest oil exporters, grew through 1978 and led to the Iranian Revolution. According to the Federal Reserve, Iranian oil output fell by 4.8 million barrels a day by January 1979, about 7 percent of world production at the time. Most of the effect on U.S. gasoline prices appears in the 1979 average.

The Federal Reserve also notes that U.S. consumer inflation was rising through 1978, and that the Fed raised its policy rate from 6.9% in April to 10% by the end of the year. In the annual record, 1978 is the last year before the price of gasoline rose by more than a third in each of the next two years.

After Hawaii ($0.78) and Alaska ($0.76), the most expensive state in 1978 was Montana at $0.69, followed by North Dakota and Wyoming, tied at $0.69. Texas was the cheapest at $0.61, ahead of Delaware and Wisconsin, so the low end of the table ran from the Gulf Coast to the Mid-Atlantic and the upper Midwest. Hawaii stood 12.3¢ above the national average, its widest margin of the decade.

The national figure of $0.66 converts to $3.24 in 2025 dollars. On that basis it ranks 29th-highest in the record, compared with 48th-highest at the pump, and it falls between 2017 ($3.17) and 2019 ($3.28). In constant dollars, then, a gallon in 1978 cost about what it did in the late 2010s. The cheap spell was short: by 1981 the pump average of $1.37 was more than twice the 1978 figure.

Counting forward from 1978, the pump price rose 39.9% by 1988 and 60.1% by 1998. Neither gain kept up with inflation: the real price was 22.8% lower after ten years and 35.9% lower after twenty.

State averages in 1978 ran from $0.61 in Texas to $0.78 in Hawaii, which puts the gap between the highest-priced and lowest-priced state at 16.8¢. The U.S. average of $0.66 in 1978 was exceeded by 29 of 51 states, D.C. included. Both the Texas figure of $0.61 and the Hawaii figure of $0.78 come from the EIA State Energy Data System, as annual averages for all grades.

National annual averages read $0.64 for 1977, $0.66 for 1978 and $0.89 for 1979. From 1978 to 1979 the pump price rose 35.7%, and measured in constant 2025 dollars the rise over the same interval was 22.0%. The 1978 figure itself stands at $3.24 in constant 2025 dollars, a series that uses CPI-U, while the pump figure of $0.66 is not adjusted for inflation.

The highest real annual average in the series, $5.08, belongs to 2012, while 1978 stands at $3.24 in those same dollars. At the pump, the 1978 average holds 48th-highest place among the 56 complete years from 1970 to 2025. The 1978 national number is the EIA State Energy Data System average for all grades of motor gasoline, taxes included, and it is approximate. The EIA series used here holds no weekly prices for 1978.