GAS PRICES!! (Yes, We’re All Feeling It)

GAS PRICES!! (Yes, We’re All Feeling It)

Every time headlines start screaming about rising oil prices, it’s hard not to feel like we’ve been transported back to 1980 minus the disco, plus the smartphones. With today’s geopolitical tensions, the déjà vu is real. But before we assume we’re reliving an economic sequel nobody asked for, it helps to zoom out and look at what’s actually different this time around.

Below are some of the biggest distinctions between 1980 and today, especially around wages, global crude production, and how much more efficient our cars have become. All data comes from publicly available sources including the U.S. Census Bureau, Bureau of Labor Statistics, National Highway Traffic Safety Administration, Environmental Protection Agency, Barron’s, MacroTrends, and S&P Global.

What Households Earned (and Spent) Back Then vs. Now

According to Census.gov, the median U.S. household income in 1980 was about $17,710, which translates to roughly $69,926 in today’s dollars. And back then, households spent over 5% of their income on gasoline, about $885.50 in 1980, or $3,496 in today’s dollars.

Fast-forward to just before the recent Middle East tensions: The Bureau of Labor Statistics reported gasoline spending had dropped to around 2.4% of disposable income, roughly $179–$204 per month.

Today, we’re creeping closer to 4%. And if oil hits $150 per barrel, analysts at Barron’s estimate gas could reach $5–$6 per gallon, pushing monthly spending toward $300–$400. That’s… not great. But still not quite the 1980s punch in the wallet.

Why? Because one thing has changed dramatically:

Cars Got Smarter (and less Thirsty…)

Fuel efficiency has quietly become the unsung hero of this whole story.

• In 1980, the average vehicle got about 20 MPG.
• By 2024, we’re closer to 27 MPG, a 35% improvement.
• And the National Highway Traffic Safety Administration projects that new 2026 models will deliver 33% more MPG than 2021 models.

Translation: even if gas prices spike, our cars are no longer drinking fuel like it’s bottomless brunch.

The Vehicle Mix Has Completely Changed

Since 2010, the types of vehicles on the road have shifted dramatically:

The biggest jump? Gasoline Start-Stop technology, which went from 0% to 55%. That alone has cut fuel consumption meaningfully. Add hybrids and EVs into the mix, and overall fuel demand per mile driven has dropped like a rock.

The U.S. Energy Position Has Shifted Too

Since 2020, the U.S. has been a net exporter of crude oil and refined products. Saudi Arabia is still the world’s largest exporter, but the U.S. is now the largest producer, responsible for about 21% of global output, though we also consume most of what we produce. (We’re basically the Costco shopper of oil: buy in bulk, use in bulk.)

The Real Concern: What Higher Oil Prices Do to the Economy

Oxford Economics estimates that a sustained 10% increase in oil prices can:

• Add 0.2 percentage points to inflation
• Reduce GDP growth by 0.1%

And because oil touches everything, plastics, clothing, transportation, logistics, the ripple effects are real.

Lower-income households feel this the most. According to the National Retail Federation’s Mark Mathews, as lower-income households often spend double the national average share of income on gasoline. That means less money for discretionary spending, which matters because consumer spending makes up about 70% of U.S. GDP.

So yes, the pain at the pump is real. But it’s not 1980 all over again.

So, What Should You Do? (Financially, Not Emotionally—Though Deep Breaths Help)

Despite the noise, the fundamentals of financial planning haven’t changed:

• Stick to your plan. Keep contributing to retirement accounts, Roth IRAs, and savings.
• If you’re drawing income, stay the course. Good income plans already account for volatility.
• If you’re unsure your plan is solid, get a risk assessment or talk to a trusted financial professional.
• Review your emergency fund and upcoming expenses. Adjust if needed.
• Rebalance your portfolio if allocations have drifted. Pullbacks often create opportunities.
• Consider Roth conversions during market declines if they’re tax-efficient for you.
• Above all, stay calm. Market cycles are normal. Discipline wins over panic every time.

And if you need a sounding board, a coffee break, or just someone to remind you that you’re doing your best in a world where gas prices have the emotional range of a telenovela, we’re here for you.