Gas Prices in 1980

The average price rose 38.4% in 1980, to $1.23 a gallon, the first annual average above a dollar in this record. After inflation the increase was 21.9%, to $4.81 in 2025 dollars. Together with 1979, the price rose 87.8% in two years.

Several forces pushed in the same direction. Crude prices remained high after the 1979 disruption, and the phased decontrol of domestic crude that began in June 1979 continued to move U.S. crude toward the world price. On April 2, 1980, President Carter signed the Crude Oil Windfall Profit Tax, an excise tax on the difference between the market price and a base price, which accompanied decontrol. In September 1980 war broke out between Iran and Iraq, disrupting exports from both countries.

The economy entered a short recession from January to July 1980, according to the National Bureau of Economic Research. The Federal Reserve notes that real oil prices began a long decline from mid-1980; the annual gasoline average, however, stayed high into 1981.

In 1979 no state averaged as much as a dollar a gallon for all grades; in 1980 all 51 did. The cheapest was Texas at $1.16, with Kansas a fraction of a cent higher at $1.16. Hawaii was the highest at $1.35, and Mississippi, which had shared second-cheapest place as recently as 1976, came second at $1.32. Hawaii’s margin over the U.S. average was 12.1¢.

Adjusted to 2025 dollars, the 1980 average of $4.81 ranks 6th-highest in the record, a little below 2013 ($4.85) and 2008 ($4.86). Before adjustment it ranks 29th-highest, in the middle of the table, because so many later years have larger dollar figures. Measured from 1970, the first year of the record, the pump price had risen 245.2% in a decade, and the real price 62.8%.

The pump price never returned to its 1978 level after this. Ten years on, the 1990 average was 7.3% lower in current dollars and 41.6% lower in real terms. Doubling the 1980 pump price took until 2006, when the national average reached $2.57.