US gasoline is retailing at an average price of $2.64 right now. Scanning the headlines this morning I see not a hint of outrage, despair, or alarmism. That’s odd because when gas prices first ranged up into the mid-$2 range the nation had a serious collective feak-out.

Things got so bad during 2005 — when prices averaged an outrageous $2.31 — that the president even held a news conference pleading with Americans to avoid “non-essential” driving. A quick search of newspaper stories from that year reveals hits like these:

  • CNN, in April, announcing poll results showing that gas prices were a hardship for a majority of Americans. (Gas averaged $2.28 that month.)
  • CBS, on September 1, arguing that high gas prices were changing behavior. (Gas prices had averaged $2.53 the month prior.)
  • Late in September, the New York Timesreporting on President Bush’s call for conservation in the face of high gas prices. (Gas prices had average $2.95 during that September, the priciest month in 2005.)
  • A bevy of stories on National Public Radio, evidence that gas prices loomed large in the nation’s conciousness.
  • In October, the Washington Postreporting plunging sales of SUVs and trucks owing to gas prices.
  • And also in October, a doomsday-type story in USA Today warning that gas prices might stay high for as long as 6 months.

What really happened to gasoline prices? Take a look:

gas prices 2005

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  • As it turned out, gas would rarely be so cheap again as it was in 2005 when everyone panicked. The high prices were not, apparently, the result of temporary influences like the hurricanes that had battered the Gulf Coast. With only a couple of brief exceptions—such as the immediate aftermath of the 2008 financial meltdown—retail gasoline prices have remained solidly above the 2005 average. And yet almost no one cares nowadays. It’s old news.

    Perhaps no one cares because gas prices are so much lower than they were during the peak of 2008; or perhaps it’s because Americans are now more concerned with the state of the economy or the health care debates. But perhaps it because of a collective psychological trick: we respond with alarm to changing circumstances but then we get accustomed to the new state of affairs with surprising speed.

    There’s a lesson here for policymakers, I’d wager. Carbon pricing, which can raise energy prices modestly, may prick some initial unease. But new prices are likely to quickly fade into the background as they become integrated into everyday decisionmaking. And that’s just the way it should be.

    Notes: All gasoline prices come from the US Energy Information Administration. I used the data series MG_TT_US, “Weekly All Grades, All Formulations, Retail Gasoline Prices.” Monthly averages given above are estimates: they are simple averages of the weekly prices reported during that month. Just so, annual averages are the simple averages of the weekly prices reported during that year.