What gas prices meant for Americans’ wallets in 2022

Traffic jams, commuting, problems and tired driver.

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After adjusting for inflation, the average annual price of gasoline exceeded $4 per gallon only five times in the 20th century – three times in the 1930s, and again in 1980 and 1981. More recently, the average price exceeded $4 in 2008 and the four years between 2011 and 2014.

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That’s only 10 times in total, and only twice the average price reached $4.50 and it never went above $4.56. So when the national average price per gallon topped $5 in June, the crisis was truly historic.

Americans hadn’t had to deal with such high inflation and such turbulent gas prices in decades, so they had to adapt — and they did.

Naturally, people have been looking for ways to burn less gas

As early as March, before things got really bad, a AAA study showed nearly six in 10 Americans planned to change their driving habits when gas hit $4 a gallon — and they kept their word.

By the time of June’s price spike, drivers had refashioned the 1970s carpooling strategy to deal with inflation and were flocking to public transport where they could.

Adam Smith, founder and CEO of Eco Energy Geek, understands their reasoning on a personal level. “The economic phenomenon of rising fuel prices has had a substantial impact on my wallet, as it has on many other people,” he said.

But Adams also sees a silver – or maybe green – lining.

“However, as an eco-energy geek and looking on the bright side, the recent increase in fuel prices has had an overall beneficial impact on the environment, as it contributes to both lower emissions and increased use of renewable energy,” he said. . “This is because rising fuel prices incentivize more efficient use of resources, reducing fuel consumption and associated emissions while encouraging the development of alternative, less carbon-intensive technologies. In addition, higher prices can reduce fuel demand, creating an economic disincentive to production, further reducing emissions.

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Cuts elsewhere were inevitable

Of course, there’s not a lot of driving you can avoid, so people had to cut other costs as well. According to Andrew Gonzales, founder and president of BusinessLoans.com, fuel is what is called a price-inelastic good.

“In economic terms, price inelasticity means that a product is unlikely to experience changes in demand as the price increases,” Gonzales said. “It’s largely because there are fewer alternatives or substitutes available on the market. Simply put, people need gasoline no matter what it costs. As the As the cost of gasoline rises, the consumer’s budget for discretionary spending, something he can control, will invariably shrink.

Families managed the inevitable shrinking of their discretionary dollars on a household-by-household basis, but when gas prices were at their highest, budgets across the country were forced into a fuel inflation regime almost every levels.

“From canceling travel plans to ditching entertainment and cutting back on savings and investments, it’s clear people have had to make tough choices,” said Kyle Marquardt, CPA, financial specialist and founder. of Homestead Brands. “Higher and less predictable fuel prices have made it difficult for many to plan ahead, which means budgeting for the future has been even harder this year.”

Companies, their customers and job candidates are adapting

Volatile gasoline prices most directly affect drivers, but the things they buy from the stores they drive arrive on trucks that burn the same fuel.

“It’s not just ordinary people who have been affected by the turbulent gas prices of 2022,” Marquardt said. “Businesses have also been affected, with many having to adjust their operations and prices to survive. This has further compounded the financial strain people have been under this year as companies have had to pass on their increased costs to their customers.

But the ripple effects also hit job seekers, who suddenly prioritized lesser opportunities nearby.

“Distance from home was often even more important to them than pay,” said Athena Kan, co-founder and CEO of Dreambound.com, which offers student training and job matching. “We’ve seen people turn down jobs that paid several dollars an hour more because the job was 45 minutes away. The economy didn’t make sense to them. As a result, some employers hiring these entry-level positions began to screen people based on those who lived closest to the company. They often didn’t consider people who lived more than 15 miles away because that person was unlikely to take the job or stick around for any length of time.

For some it was a teachable moment

Minor emission reductions weren’t the only hidden benefit. Skyrocketing gas prices have shaken some people out of their financial complacency and forced them to create and follow a spending plan for the first time.

“For some, it was a great experience,” said Spencer Reese, CEO of Military Money Manual. “They learned how to manage their budget during this sharp rise in inflation. A few of my friends have told me how inflation has helped them finally manage their otherwise excessive spending.

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