Gas Prices in 1989

The average price rose 9.4% in 1989, to $1.00 a gallon, and 4.4% after inflation, to $2.61 in 2025 dollars. It was the largest increase since 1981.

Crude prices firmed after OPEC’s November 1988 production accord, and in June 1989 OPEC raised its ceiling to 19.5 million barrels a day. In March the tanker Exxon Valdez ran aground in Prince William Sound, Alaska, spilling about 11 million gallons of crude oil.

The year also brought the first federal limit on the volatility of summer gasoline. Phase I of the EPA’s Reid vapor pressure rules took effect on June 1, 1989. Depending on the state and month, summer gasoline could not exceed 10.5, 9.5, or 9.0 pounds per square inch, to reduce the evaporative emissions that contribute to ground-level ozone. Lower-volatility gasoline costs more to make, and the rule was a first step toward the separate summer and winter blends in use today. A tighter Phase II followed in 1992.

The national all-grades average returned to a dollar or more in 1989, at $1.00, after three years below it. The change showed up across the country: the number of states averaging at least a dollar rose from 9 in 1988 to 35.

The year holds the same place in both national rankings, 43rd-highest at the pump and 43rd-highest after inflation. Its real figure, $2.61, lies between 2001 ($2.58) and 2020 ($2.70). Against 1979, a decade earlier, the pump price was 12.8% higher but the real price 33.9% lower. By 2009 the pump price had climbed 134.6% beyond the 1989 level, and the real price 35.5%.

Georgia again had the lowest state average, $0.89, well below Missouri at $0.93. The District of Columbia, Maryland and Connecticut were the most expensive after Hawaii, which averaged $1.30, 30.0¢ over the U.S. figure. Indiana was third from the cheap end, and California and Kansas tied for fourth. The 1989 pump price was not doubled until 2005, at $2.27.