By Matthew E. Milliken
Oct. 28, 2014
On Sunday night, I was driving around Durham, North Carolina, when I noticed that a nearby gas station was selling unleaded for $2.99 a gallon. I did a quick search on Gas Guru, an iPhone app, and found a bunch of local stations that were offering the same price. It’s the lowest I’ve seen in quite a while.
A web search on Monday morning led me to this chart at a website called GasBuddy.com, which showed that gas prices nationally have been trending downward since late June. It’s difficult to discern precise numbers and dates on the graph, but the average U.S. price is a little less than than $3.09 per gallon right now.
The last time gas was so cheap was around the start of 2011, when the price was headed up; in May 2011, the price spiked at above $3.85/gallon. That’s the second-highest price for gas in the past decade.
The peak price was near $4.10 in June 2008. But soon after that, the price plunged. About six months after gas reached its highest level over the previous decade, it hit its lowest level in the same period. On Nov. 27, 2008, gas cost just $1.59.
A lot of conservatives seem to have forgotten this, but 2008 — the final year of the George W. Bush presidency — marked the beginning phase of the great recession, which lasted until June 2009. (Technically, the recession began in December 2007.)
In case you’ve forgotten about the recession — from which the U.S. economy continues to recover in rather sluggish fashion — let’s review.
After months of being at or below 4.7 percent, the unemployment rate rose to 5.0 percent in December 2007. It hit 6.1 percent in August 2008 and 7.3 percent in December 2008. Four months after that, it was 9.0 percent. In October 2009, the unemployment rate peaked at 10.0 percent.
The rate didn’t fall below 8 percent until September 2012. It has yet to return to pre-recession levels.
I want to look at one other indication of the scope of the great recession. In the final quarter of 2008, gross domestic product contracted by 8.2 percent — the largest decline in GDP since the start of 1958, when GDP fell by an astonishing 10 percent.
To give an idea of how large the 2008 Q4 contraction was, it’s only the third time that GDP dropped by more than 5 percent since 1958. (The other occasions were 1980 Q2, which saw a decline of 7.2 percent, and 1982 Q1, when it was 6.5 percent.)
So while gas prices were extremely low in President George W. Bush’s last year in office, those prices weren’t exactly a sign of a healthy economy. In fact, one reason it was so cheap to fill your car’s gas tank right before President Barack Obama was inaugurated was because the economy was so bad that demand for gasoline dropped significantly.
That’s not something I saw mentioned much over the last three years, when gas cost $3.25 or more a gallon — which, as conservatives loved to point out, was higher than the price of fuel throughout nearly all of the George W. Busy presidency.
So it’s great that gas prices are trending downward. But it’s even better that the decline is taking place without the economy suffering a catastrophic slump.