Gas Prices in 1985

The average price rose 1.3% in 1985, to $1.13 a gallon, the only increase between 1982 and 1986. After inflation it fell 2.1%, to $3.37 in 2025 dollars.

The more important change came late in the year. Saudi Arabia had cut its own production to support OPEC’s official price as other producers exceeded their quotas; by the summer of 1985 its output had fallen to about 2 million barrels a day, well below its capacity. In the second half of the year it stopped doing so, tying its prices to the spot market and raising production, which rose to about 5 million barrels a day by early 1986. The result was the collapse in crude prices in 1986.

In November 1985 the Department of Energy held the first test sale from the Strategic Petroleum Reserve, selling one million barrels to check how an emergency release would work. The annual gasoline average for 1985 does not yet show the price decline, because most of the fall in crude came in the first half of 1986.

California had the second-lowest state average in 1985, $1.09, behind only Missouri at $1.07. It did not stay there: by 1999 California ranked 46th from the cheapest. At the top of the 1985 table, the District of Columbia ($1.29) was second only to Hawaii ($1.39), and ahead of Alaska. Mississippi was third-cheapest, and Minnesota, at $1.22, had the fourth-highest average, the highest of any state in the lower 48.

The national average of $1.13 was 94.2% above 1975, almost double, while the real price was 2.9% lower. Across the next decade the pump figure hardly moved, rising 1.6% by 1995, and the real price shed 28.3%.

By 2005 both measures had turned upward. The pump price was 101.4% higher than in 1985, and even after inflation the price was 11.0% higher. In 2025 dollars, 1985 ranks 26th-highest at $3.37, a shade below 2024 ($3.39), and 36th-highest at the pump. The 1985 pump price was first doubled in 2005, when the national average reached $2.27.

Gasoline averaged $0.85 a gallon in 1986, after a fall of 24.6% at the pump from 1985 to 1986. Adjusted to constant 2025 dollars, the 1985 to 1986 decrease was 26.1%. In 1984 the average had been $1.11, before the 1985 rise to $1.13.

The 2012 annual average of $5.08 in constant 2025 dollars is the highest in the series that begins in 1970 and runs through 2025. That series holds 56 complete years, and 1985 is one of them.

A spread of 32.3¢ separated the state averages in 1985, with Missouri at $1.07 and Hawaii at $1.39. The 1985 average was above the U.S. average of $1.13 in 34 of 51 states, the count including D.C. Those state averages come from the EIA State Energy Data System and cover all grades for 1985.

Gasoline averaged $0.58 at the pump in 1975, against $1.13 in 1985. Taxes are included in the 1985 price of $1.13, which is approximate. Pump figures are not adjusted for inflation, while the constant-dollar figures use 2025 dollars and the CPI-U.