Gas Prices in 1996

The average price rose 6.8% in 1996, to $1.22 a gallon, the highest annual average at the pump since 1982. After inflation the increase was 3.8%, to $2.51 in 2025 dollars, the first real increase since 1990.

Two supply-side changes stand out. California began requiring its own Phase 2 reformulated gasoline, a stricter specification than the federal version, in 1996. And the federal ban on leaded gasoline for road vehicles took effect on January 1. Crude oil prices were also higher than in 1995. In May the Department of Energy lent 0.9 million barrels from the Strategic Petroleum Reserve after a pipeline blockage interrupted crude deliveries to the midcontinent, and it sold oil from the reserve’s Weeks Island site in 1996 and 1997 to fund the site’s closure.

The same month, the United Nations and Iraq agreed on an oil-for-food arrangement that allowed limited Iraqi oil exports; the first contracts under it were approved at the end of the year, adding a source of supply for 1997.

At $1.22, 1996 had the highest national pump price of any year in the 1990s, a fraction of a cent above the 1997 figure of $1.22. Its rank in the full record is 30th-highest before inflation and 47th-highest after it.

It was also the first year since 1990 in which every state averaged a dollar or more. The cheapest, Georgia at $1.04, was well clear of South Carolina ($1.11), while Hawaii ($1.51), Connecticut and Alaska had the highest averages, with the District of Columbia fourth and Oregon fifth. Two states shared the third-cheapest price, $1.13: Indiana and Oklahoma. Hawaii was 28.5¢ above the national average.

In real terms 1996 cost about the same as 1986: $2.51 against $2.49, a difference of 0.7%, even though the pump price had risen 44.1% over the ten years. The decade after 1996 was different; the 2006 average stood 63.6% higher in 2025 dollars and 110.3% higher at the pump. Twenty years on, 2016 was a cheaper year than 2006 but still 14.5% above 1996 in real terms.