Americans reconsider driving, spending habits and their employment amid record gas prices
Price of gas in U.S. reached record high $4.173 on Tuesday
Biden admin has 'thrown a wet blanket over US oil and gas' since taking office: Canary CEO
Dan Eberhart, the CEO of Canary, one of the largest independently held oilfield service companies in the U.S., argues that instead of unleashing American energy, Biden has been trying to reduce production at home even as prices have increased.
Americans are rethinking their driving and spending habits as gas prices surge to record highs.
The average price of regular unleaded gas in the U.S. reached $4.173 a gallon Tuesday, breaking the previous record from July 2008, according to AAA. In California, the average price hit $5.444 a gallon, which is also a record.
Tripp Harris, a 26-year-old Ph.D. student at Indiana University Bloomington, worked as a part-time driver for Uber Technologies Inc. for the past five years. He made a few hundred dollars in supplemental weekly income—until the past couple of weeks, when he stopped.
"I can’t afford to drive Uber anymore," he said, as gas prices in his area are about $4.25 a gallon.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UBER | UBER TECHNOLOGIES INC. | 71.62 | +0.06 | +0.08% |
Gas prices are advertised at over $6 a gallon Monday, March 7, 2022, in Los Angeles. (AP Photo/Marcio Jose Sanchez / AP Newsroom)
RUSSIA-UKRAINE WAR IS A ‘WAKE-UP CALL’ FOR US ENERGY POLICY
The higher prices have cut into his earnings, making the Uber gig less appealing, he said.
Mr. Harris said his reduced income has prompted him to cut back on his own discretionary spending. "I’ve been more intentional about going out to eat and things like that," he said. "I’ve been trying to drive less—still trying to figure that one out."
Uber said drivers’ earnings remain elevated compared with the company’s historical trends. "We’ll continue to monitor gas prices and listen to drivers over the coming weeks," a spokesman for Uber said.
The rapid rise in gas prices comes as the U.S. is still recovering from the economic shock of the Covid-19 pandemic. The price increase threatens to eat into consumer spending as the cost of other goods also continues to rise. Economists and analysts said the increase in gas prices will force some people to cut back on driving or put off vacations.
Gas prices in the U.S. had already been creeping up in recent weeks, even before Russian forces invaded Ukraine. More drivers had been returning to the roads as Covid-19 restrictions eased, but the nation’s capacity to refine gasoline remained below pre-pandemic levels, creating a choke on supply when demand was on the rise.
Russia’s invasion of Ukraine caused another supply shock as traders, shippers and financiers rejected Russian oil, omitting much of it from the daily global supply. Oil prices rose again Tuesday after the Biden administration announced a ban on imports of Russian crude oil, certain petroleum products, liquefied natural gas and coal.
President Biden acknowledged that banning Russian crude oil will result in higher gas prices in the U.S. He said the administration’s previously announced move to release 30 million barrels of oil from the government’s reserves will help blunt the price increases at the pump.
"I’m going to do everything I can to minimize Putin’s price hike here at home," Mr. Biden said.
OIL PRICES GIVE UP OVERNIGHT GAINS AFTER US BANS IMPORT OF RUSSIAN CRUDE
Not only have average gas prices reached records, the pace of the increase has been staggering, said Patrick De Haan, head of petroleum analysis at price tracker GasBuddy.
The average price of regular unleaded gas rose 55.4 cents a gallon Tuesday compared with the previous week, according to AAA. The price was 15% higher than a week earlier and 21% higher than a month earlier, the automobile association’s figures showed.
"It’s been astounding for motorists to wake up and see the station nearly 60 cents higher than just a week ago," Mr. De Haan said. "Some community stations are up 80 cents, even a dollar a gallon. It’s just astronomical."
Beth Ann Bovino, chief U.S. economist for S&P Global Inc. , said higher prices at the pump could result in less spending on other items and will affect lower-income households the most because they have less money and fewer options for cutting back on expenses.
"It’s going to crimp household purchasing power dramatically," Ms. Bovino said. "People won’t feel wealthy enough to buy that expensive steak, so they’ll go for cheaper options."
Gas prices are displayed outside an Exxon station in Washington on Tuesday, March 8, 2022. (Bill Clark/CQ-Roll Call, Inc via Getty Images / Getty Images)
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Some households will try to finish several errands in just one car trip, she said. Families may change vacation destinations to somewhere closer to home, or rethink those plans altogether, she said.
Mr. De Haan said the sticker shock at the pump may not put an immediate dent in fuel demand with more pandemic-weary Americans anxious to travel and get out. But with gas prices expected to continue rising amid the Russian offensive in Ukraine, the higher cost of fuel will soon begin to take its toll, he said.
"For a lot of these folks, they may still be living check to check," Mr. De Haan said. "In two months’ time, they will start to feel the pain."
CLICK HERE TO READ MORE ON FOX BUSINESS
David Gifford drives five days a week to work at an automotive-interior-parts manufacturer in metro Detroit, about 20 miles from his home. He most recently filled his gas tank for $4 a gallon.
"To add another $60 a week to our gas tanks suddenly starts eating into other things," he said.
If gas prices continue to climb, Mr. Gifford said he would consider taking buses to work rather than driving, despite a bus commute taking about two hours each way, compared with about 30 minutes by car.
"If I had to add on extra hours of commuting to my day, that would be a big loss for family time," he said.
Click here to read more on the Wall Street Journal.