Gas prices are rising again—what can we do?
As we’ve been warning would happen for a while now, oil prices are rising again. Oil prices have already reached $80 per barrel, and look unlikely to stop increasing anytime soon.
Gas prices have followed the trend upward: At the time of writing, the national average gas price was almost $3 per gallon—a level not seen in more than three years. In a dozen states, prices have already passed that threshold.
All of this is bad news for Americans, for a host of reasons.
The first part is obvious: the effect on American drivers. As the price of gas rises, Americans are forced to spend more of their hard-earned dollars on fuel. And when we say forced, we mean forced. With most other products in the United States — food, cleaning supplies, tech, etc. — people have more than one option. If the price of beef rises, we buy more chicken. If Dawn soap becomes more expensive, we buy Palmolive instead. If the cost of Apple products is deemed outrageous, we switch to Google or Microsoft. Not so with gasoline.
If you have a 15-gallon tank and the price of gasoline jumps from $2 per gallon to $4 per gallon, you’re now spending $60 each fill-up instead of $30.
And if you don’t want to — or can’t — fill up your tank, well, too bad. It’s your only option if you want to get to work and get your kid to school. It imposes tough decisions on families: Do I skimp at the grocery store or the gas station? Will I pay my electric bill on time, and risk stretching that last gallon until payday? Should I fill my tank or my prescription?
The pain Americans feel from high gas prices is all too real—as demonstrated by this clip from our documentary PUMP the Movie.
This spending squeeze doesn’t just hurt individual Americans; it has broader negative implications for our economy as a whole. As people are compelled to spend more and more of their paychecks on gasoline, they have less disposable income that they can spend on goods and services at other American businesses.
There’s a third insidious problem associated with rising gas prices: The cost of almost everything else goes up as well. Think about it—how do goods get to market? They get shipped there. Whether it’s by car, truck, plane, or boat, oil’s 92% monopoly on our transportation sector ensures that it will be more expensive to get items to their end destination. This causes companies to charge more, which means Americans who already have less money in their pockets will struggle even more and, in turn, so will American companies and the economy as a whole.
Put all of this together, and it’s no surprise 10 of the past 11 recessions in U.S. history were preceded by oil-price spikes.
So what can we do? Improve and diversify.
We must continue to improve the fuel economy (known more commonly as mpg) of the vehicles on the road. That way, Americans will be able to go farther between stops at the gas station. The nation’s Corporate Average Fuel Economy (CAFE) standards are designed to do just that. If the current 2025 target is allowed to stay in place (it’s currently in danger of being weakened or done away with completely) consumers could save more than $8,000 on fuel costs over the lifetime of their vehicle.
We must also diversify our fuel sources. The reason a spike in gas prices causes immediate harm to American consumers is because we’re unable to switch to cheaper fuel options. Even when gas was below $2.50 per gallon, alternative fuels like natural gas, ethanol, and electricity were all cheaper than gasoline — able to net drivers hundreds of dollars’ worth of savings each year if they made the switch. As gas prices continue to rise, those savings will only increase and make diversification all the more important.
If we want to survive this gas-price spike and neutralize the threat of future spikes, it’s imperative that Americans have more efficient vehicles and access to cheaper, cleaner, American-made alternative fuels. Let’s get it done.
- How much does a gallon of gas actually cost?
- Automakers shouldn’t stop at electrification
- Alternative fuels vs. oil: Which is cheaper?
- The 7 craziest things that caused oil prices to rise