A driver in Belleville, New Jersey cut a cable and reduced the size of his apartment to save on gas. A retiree from Vallejo, California, said he stopped driving to go fishing because the miles were too expensive for fuel. A car repairman in Toms River, New Jersey doesn’t go out to restaurants very often. And delivery man Uber Eats said it couldn’t afford frequent visits to his family and friends, some of whom live 60 miles away.
“These are tough times,” said Chris Gonzalez, 31, an Uber Eats driver, filling his tank at a Safeway gas station off Interstate 80 in California.
Millions of American drivers are acutely aware of the recent gas price spike, which hit its highest level since 2014 last month. According to AAA, the national average per gallon of gas is $ 3.41, up $ 1.29 from a year ago. Even after the recent drop in crude oil prices, gasoline is still 7 cents more per gallon than a month ago.
While consumers are seeing steadily rising prices for many goods and services, the cost of gas is particularly noticeable. It is displayed along highways across the country, including in areas where the cost of a gallon has reached $ 7.59.
Lower gas prices are pushing people to reallocate household budgets, sometimes by cutting off leisure activities and other times by cutting back on basic necessities. Many are trying to save money by spending less time on the road, which is difficult as the holiday season approaches, and with it the temptation to make up for lost celebrations last year. Just 32 percent of Americans plan to drive on Thanksgiving Day, up from 35 percent last year at the height of the pandemic and 65 percent in 2019, according to a poll by fuel-saving platform GasBuddy.
Consumers saw the prospect of some relief this month as oil prices fell in response to the strengthening US dollar along with concerns over the looming Covid-19 lockdown in Europe and gas prices began to stabilize. While there is usually a lag between falling oil prices and cheaper gas, President Biden this week tasked the FTC with investigating why gas station prices have not dropped as much as one would expect, citing the possibility of “illegal behavior.” »Oil and gas companies. The administration is also facing calls from Congress to tap the country’s strategic oil reserves, which Senate Majority Leader Chuck Schumer said will help Americans in dire straits.
Gas prices rose in part due to fluctuations in supply and demand. Oil demand fell sharply in the early months of the pandemic, so the Organization of the Petroleum Exporting Countries and other oil producing countries cut production. In the United States, declining demand has led to a significant decline in drilling; In the summer of 2020, the number of oil rigs in the country fell by almost 70 percent.
But over the past year, oil demand has rebounded much faster than OPEC has recovered production, and crude oil prices have doubled to $ 84 a barrel. (Since November 9, the price has dropped to just over $ 76).
The shutdown of some of the major US refineries during the pandemic has also reduced oil supplies. Since the beginning of 2020, about 5 percent of the country’s refining capacity has closed due to reduced travel.
“When demand recovers, but you’ve permanently removed some source of supply, prices rise,” said Andy Lipow, president of Houston-based consulting firm Lipow Oil Associates. “The consumer feels pain from the pump.”
For drivers, rising costs have added stress to commuting and weekly routines; suddenly having children on business or dropping out of school took on new financial weight. Similar to supply chain disruptions due to labor shortages, gas prices have also fueled a growing feeling among consumers that the economy is not fully functioning for them.
Aldo McCoy, who owns a Toms River auto repair shop, watched the gas pump numbers increase on Wednesday as he refueled his 1963 Chevrolet Impala. He remembered refueling his 2003 Cadillac Escalade recently and saw the price hit over $ 100, up from $ 45.
Mr McCoy said he and his staff worked more than 15 hours of overtime a week to make up for the extra money they spent on gas. He also cut down on his household expenses.
“You don’t often go shopping or have lunch,” he said. “You cannot travel for fun. It’s not on the table now. “
Louise Tomitz, 74, a retired welfare worker in the Toms River area, said the gas price made it difficult to cover the cost of visiting her daughter’s nearly an hour’s drive in Middletown, New Jersey.
19 November 2021 7:00 PM ET
“I’m not working now, and then you have to pay all this extra money for gasoline, and it affects my budget,” said Ms Tomits. “It’s getting rough.”
Drivers shocked by gas prices are seeing more than just the impact of crude oil costs. Compliance with renewable fuel standards could add more than 10 cents a gallon, the price of ethanol has risen, and labor shortages in the trucking industry have made it more costly to transport gas from terminals to stations.
Energy analysts note that gas prices have been higher in the past; in 2008, the national average exceeded $ 4.10 a gallon. (Adjusted for inflation, that would be the equivalent of $ 5.16 today.) They are optimistic that the increase in travel and gas demand is a reflection of the economic recovery after the pandemic, although they are worried that rising prices may compel people cut other costs. expenses.
“If gas prices rise enough to impact consumer disposable income, it will be reflected in discretionary spending,” said Fawad Razakzada, market analyst at ThinkMarkets. “That would be bad news for retailers.”
In California, where the median price per gallon is the highest in the country at over $ 4.60, drivers said they were changing their behavior. Some have looked for cheaper locations like Costco and Safeway gas stations to save a few dollars.
At Arco station in San Francisco’s NoPa neighborhood on Thursday, a line of cars entered a crowded street. Some drivers were looking for a shift. Others complained about prices, which jumped to $ 4.49 at Arco, which is known locally for its usually cheap prices, and to $ 5.85 in the most expensive part of town.
Keith Crawford, 57, who ran his Kia Optima, said he started getting less gas twice a week to soften the blow to his bank account.
“To stay afloat, you have to spread it out,” said Concierge Mr. Crawford. “It’s part of the budget now.”
Thirty miles northeast of San Francisco in Vallejo, drivers lined up at a Safeway gas station off I-80, where the price was $ 4.83 a gallon. Some have blamed their bills on the Biden administration.
“This is Biden, Gavin Newsom – look at the gas taxes we pay,” said 54-year-old retiree Kevin Altman, referring to the governor of California.
Mr Altman paid $ 50 to refuel his jeep and calculated that he would only have enough gas for two days. He said he stopped driving to go fishing in nearby Benicia to avoid using too much gas and would be doing all of his Christmas shopping online this year.
The cost can be especially daunting for people who own a transit-dependent business. Mahmut Sonmez, 33, who runs a car service, spends nearly $ 800 on gas from the $ 2,500 he earns every week while traveling in New Jersey. To save money, in September he moved into an apartment in Belleville, which is $ 400 cheaper than his previous home. He also turned off cable TV and changed his mobile data plans.
If gas prices continue to rise, Sonmez said he will consider changing jobs after nine years in the industry. “Somehow we have to pay the rent,” he said.
In New Jersey, where self-service refueling is prohibited, some drivers channel their anger at the attendants.
“Every day they curse me,” said Gaby Marmol, 25, assistant station manager at Newark’s BP station, adding that when she sees how much customers spend on both gasoline and in-store goods – $ 1.19 per calls that used to be 50 cents – she sympathizes. “We’re just doing our job, but they think we’re setting prices.”
Shayk Diakite, 62, who runs a Mobil station in Newark, doesn’t get as much tip as it did before the pandemic, he said, and becomes frustrated when customers attribute the high prices to Mr. Biden.
Mr. Diakite usually spends his afternoons looking out for his most loyal clients. Baby Amzad, who works at a nearby school, always makes the same request to him: “Fill it out.” But when she arrived on Thursday, she asked him to give her only $ 30 worth of gasoline.
“Today I’m not fully full because I have other expenses,” said Ms. Amzad, 54, who travels to Newark from Linden, New Jersey. “Everyone hurts.”
Because she spends so much on gas and groceries, Ms Amzad continued, she cannot afford many indulgences. “I don’t go to Marshalls anymore.”
Clifford Krauss made reporting.