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If there were a poster child for current inflation, it would be the price of gasoline.
While prices on all goods and services across the country are up 9.1%, according to the Bureau of Labor Statistics, gas prices are up 60% over the past year. And this increase puts American drivers on a path to spending as much as $562 billion on gasoline in 2022, roughly double the amount spent in 2020, before prices began their ascent.
The rising price of gas, like the prices on most other things, is the result of a perfect storm of unpleasant things — including a pandemic leading to supply chain and staffing issues, and a war in Ukraine disrupting global markets. The number of U.S. gas refineries in operation has still not reached pre-pandemic levels, and those in operation can’t keep up with increasing demand as Americans have taken to the roadways in full force.
But for many Americans at the pump, the “why” of rising gas prices doesn’t matter as much as the “how much.”
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Gas prices by the numbers
Based on what we know about annual gasoline consumption, Americans likely spent about $105 on gas per vehicle in July 2020. In July 2022, it will likely be closer to $226. If this $121 markup was a one-month thing, it may be tolerable, but the high prices didn’t begin and won’t end in July. The national average price of gas hit over $5 a gallon in the second week of June, according to the U.S. Energy Information Administration, and while it fell slightly in the weeks following (to $4.65 in the second week of July), it may climb again.
What this means across the nation: In all of 2020, Americans spent an estimated $279 billion on gasoline; in 2022, that total could reach $562 billion.
States where drivers are on track to spend the most include: Texas ($57B), California ($55B), Florida ($37B), New York ($21B), Georgia ($21B) — some of the most populous states, but not in order of population.
This comes at a time when prices on all goods and services have climbed 9%, and food alone has risen more than 10% over the past year, according to the most recent release from the Bureau of Labor Statistics. Gasoline prices have risen 60% during that period, and the added financial pressure is inescapable for many Americans.
Who is hurt the most?
And as with many economic conditions, when it comes to gas prices, the impact is greatest among those who can withstand it the least.
Many Americans must drive to and from work each day. More workers than ever have the option of telecommuting, but this isn’t the case for workers in many industries. With few exceptions, retail and service work can’t typically be done from home. You can’t wait tables, landscape or clock in at a gas station if you don’t leave your house. An estimated 37% of jobs could be done from home, and those account for 46% of wages across the nation, underscoring that those with telework options are employed in higher-paying fields, according to a 2020 analysis from the National Bureau of Economic Research.
Rural drivers are also at a disadvantage. Not only do people in smaller towns have to drive farther to access doctors, grocery stores and just about everything else, but there also is likely no public transportation to serve as an alternative. Using the train or a bus may not be ideal to those in big cities who happen to have cars, but it’s an option when gas prices become too much to bear.
Finally, lower- and middle-earning households are likely to spend a greater share of their income on gasoline, according to spending data from the Bureau of Labor Statistics. While a high-income household can often find areas of their budget to trim back to account for higher fuel prices (if they even need to), the same can’t be said for households where nearly every expense is a “need” rather than a “want.”
Potentially overlooked (or underestimated) ways to save
There are many ways to save on gas, and though they may not drop the price per gallon to 2020 levels, they can make a significant difference. Using cash-back credit cards and gas apps, carpooling and driving less are default (and worthwhile) suggestions, but here are a few others you may not have thought of, or simply underestimated.
Join grocery gas discount programs
OK, one loyalty point for every dollar spent on groceries may not seem like much, but it can add up quickly, especially if you have a household of people to feed. At Kroger stores, for instance, you can redeem up to 1,000 fuel points for $1 off each gallon of gas. Even at the low end — redeeming 100 points for $0.10 in savings per gallon — a full tank could be a few dollars cheaper. These kinds of programs really pay off if you drive a pickup or large SUV with a big tank. Check your local grocery stores to see if they offer gas discount programs.
Call your auto insurance provider
There are many ways to save on car insurance — freeing up gas money — and the savings may be significant. Auto insurance companies have discounts for all kinds of things: being a safe driver, a good student or a homeowner, for instance. Call them to ensure you’re reaping those benefits, and to check if there are ways you can fine-tune your policy amounts to save on your monthly premiums.
Get auto insurance quotes
There’s a good chance you could save money by shopping around for a different insurance provider, too. A 2017 NerdWallet survey found that 43% of insured Americans hadn’t checked their current price or compared prices across insurers for at least a year. That analysis estimated potential savings at about $400 per year for doing so.
Insurance rates vary by provider; it’s a simple fact. And shopping around for the best rates should be something you do annually in order to ensure you’re not overpaying.
Visit 211.org
If you’re struggling to make ends meet and increased prices on gas and everything else are making it difficult to cover all of the costs, contact the United Way at 211.org or by calling 211. They can put you in touch with local resources that may be able to provide financial assistance, including gas vouchers.
METHODOLOGY
Gas price calculations are based on monthly averages of national gas prices from the U.S. Energy Information Administration up to and including the week ending July 11, 2022. This price data was paired with 2020 state and national monthly gas usage by gallon from the Federal Highway Administration. Analysis assumes consumption is relatively stable.
For the estimated cost of gas throughout 2022, the average gas price in July, based on data through week ending July 11 ($4.71 per gallon) was used throughout the remainder of the year, under the assumption that gas prices are unlikely to fall in a significant manner over the next several months.
Dollar figure estimates for the month of July based on cost-per-gallon data from the U.S. Energy Information Administration paired with 2020 per-vehicle consumption data from the Bureau of Transportation Statistics.
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