A driver in Belleville, N.J., cut his cable and downsized his apartment to save money for gas. A retiree in Vallejo, Calif., said he had stopped driving to go fishing because the miles cost too much in fuel. An auto repairman in Toms River, N.J., doesn’t go to restaurants as often. And an Uber Eats deliveryman said he couldn’t afford frequent visits to his family and friends, some of whom live 60 miles away.
“Times are tough right now,” Chris Gonzalez, 31, the Uber Eats driver, said as he filled up his tank at a Safeway gas station off Interstate 80 in California.
Millions of American drivers have acutely felt the recent surge in gas prices, which last month hit their highest level since 2014. The national average for a gallon of gas is $3.41, which is $1.29 more than it was a year ago, according to AAA. Even after a recent price dip in crude oil, gasoline remains 7 cents more per gallon than it was a month ago.
While consumers are seeing a steady rise in the prices of many goods and services, the cost of gas is especially visible. It is displayed along highways across the country, including in areas where a gallon has climbed as high as $7.59.
Steeper gas prices are pushing people to rejigger household budgets, sometimes by forgoing leisure activities and in other cases by cutting back spending on essentials. Many are trying to save by spending less time on the road, a difficult proposition as the holiday season approaches, and with it the temptation to make up for the lost celebrations of last year. Just 32 percent of Americans plan to drive for Thanksgiving, down from 35 percent last year, at the height of the pandemic, and 65 percent in 2019, according to a survey from the fuel savings platform GasBuddy.
Consumers glimpsed the prospect of some relief this month as oil prices fell, responding to a strengthening U.S. dollar along with concerns about impending Covid-19 lockdowns in Europe, and gas prices began to stabilize. Though there is normally a delay between a drop in oil prices and cheaper gas, President Biden instructed the Federal Trade Commission this week to investigate why prices at the pump haven’t declined as much as might be expected, citing the possibility of “illegal conduct” by oil and gas companies. The administration is also facing calls from Congress to tap the country’s Strategic Petroleum Reserve, which the Senate majority leader, Chuck Schumer, said would help struggling Americans.
Gas prices have gone up in part because of fluctuations in supply and demand. Demand for oil fell precipitously in the early months of the pandemic, so the Organization of the Petroleum Exporting Countries and other oil-producing nations cut production. In the United States, reduced demand led to a substantial decline in drilling; the country’s oil rig count was down nearly 70 percent in summer 2020.
But over the past year, demand for oil recovered far faster than OPEC restored its production, and crude oil prices doubled to as much as $84 a barrel. (Since Nov. 9, the price has declined to just over $76.)
The shutdown of some large American refineries during the pandemic also tightened the oil supply. Since the beginning of 2020, some 5 percent of the country’s refining capacity has closed, responding to a decline in travel.
“When you have demand recovering but you’ve eliminated permanently some source of the supply, then prices go up,” said Andy Lipow, president of Lipow Oil Associates, a consulting firm in Houston. “The consumer is feeling pain at the pump.”
For drivers, the rising costs have added stress to commutes and weekly routines; suddenly, popping out for errands or dropping children at school has taken on new financial weight. Like breakdowns in the supply chain to labor shortages, gas prices have also contributed to a growing sense among consumers that the economy is not fully functioning for them.