How Much Did Gas Cost in 1920?

In 1920, the price of gas averaged around $.20 a gallon. It might sound like a great deal – until you factor in the idea of inflation.

We know that gas cost $.20 in 1920. But, how does that relate to today's dollars?

Consider, for example, that in 1920 the average annual income was between $1000 and $2000. Suddenly that $.20 is a much larger chunk of your paycheck than you expected, and the deal doesn't seem quite so great. Thus, understanding the price of gas in 1920 involves looking not just at that $.20 figure, but at the actual cost compared to the paychecks people were bringing in.

Factors of the Cost of Gas

So, how and why has the cost of gas gone up since 1920? The cost of gas depends on so many factors that it’s almost impossible to predict or evaluate without leaving something out or oversimplifying something else.

In general, today’s prices are driven by the price of crude oil, as well as state and federal taxes, worldwide demand for oil, transportation costs, and retail mark-up. In 1920, things were a bit simpler, but the main issues were largely the same. 

In 1920, as in 2010, the public was concerned about efficiency, and they were largely at the mercy of the prices of gasoline if they chose to travel via automobile. Back then, of course, people had a choice, but the cost of keeping a horse and buggy wasn’t exactly low, either, and the debate was gradually shifting to favoring automobiles.

Tests were done to determine the true efficiency of various fuels, and when gasoline proved to be the most economical, demand for it began to rise – especially as more and more cars began to crowd the American roads. Add the beginnings of supply and demand to the fact that gasoline was, then as it is now, expensive to produce, and you’ve got sky-high fuel prices on your hands in 1920.