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When inflation hits, it tends to become the talk of the town as gas prices hit all-time highs and consumers go into more credit card debt to afford everyday life.
Whether you drive less than 25 miles per day or go the long haul, all types of commuters feel the pinch.
But all is not lost: Coping with inflation simply requires more awareness around your discretionary spending and discipline in your budgeting.
We’ll take a look at how exactly inflation affects economies, how and why it tends to get so bad, and what you can do from there.
A Short History of Gas Prices
In 2012, gas prices hit new records across the country at $3.62 per gallon. Experts say that was due to hurricanes, refinery outages, and tensions in the Middle East. This was followed by a global financial crisis that took oil prices down from $147 a barrel to under $34 by the end of the year.
But what about the year 2022? There were no significant natural disasters recently and no breaking news stories about refinery outages.
On top of that, the United States is playing its smallest role in over a decade since President Joe Biden withdrew troops between February 2020 and August 2021.
Well, the answer, like most things these days, starts with COVID-19.
What usually affects the price of gas?
Economically, gas prices react to the average cost per barrel of crude oil. Other factors that determine gas prices include the costs of refining and distributing fuel, taxes, and widening corporate profit margins.
It becomes clear, then, how inflationary pressures affect the price of gas. When the costs of drilling and obtaining that oil go up due to unforeseen events and disasters such as COVID-19, profit margins decrease.
As a result, the cost per barrel of oil starts to rise. When this rises, so do the costs of oil refining and distribution. To soften this pinch, oil companies widen profit margins by passing these inflated costs down to the consumer.
And by the time injection-ready gasoline reaches the consumer at the pump, these inflated costs have indeed made their way down to the final price of gas per gallon.
Gas Prices After the COVID-19 Pandemic
Gas prices started to spike in November of 2020 in the midst of the COVID-19 pandemic, but by the summer of 2021, most Americans were back on the road and looking for ways to travel after a long start to the global pandemic.
Meanwhile, U.S. oil production wasn’t able to keep up after being shut down in the Gulf of Mexico due to Hurricane Ida.
On a global scale, major oil exporters only agreed to modest increases in production. According to CNBC, this contrasted with major consumers like the U.S. and India, who pushed for higher exports.
This perfect storm of events was only amplified by the ongoing tension between Russia and Ukraine.
What does this mean for commuters?
To put it plainly, inflated gas prices put a lot of pressure on your gas budget. Surging inflation rates only make this worse.
On August 10, 2022, the national average gas price was $5.05.
The average American commutes around 16 miles to work each way. That means 32 miles per day. If you factor in this current average and the average vehicle’s miles per gallon on the road today (24.9 in 2021), you would have been spending more than $30 a week on gas alone.
Filling Your Tank Can Cost You an Hour’s Worth of Work
The average American earns $27.38 an hour (a $53,383 salary). If $30 of that will pay for your gas, it’s an hour of labor just to cover getting to and from your place of business.
Meanwhile, according to the Bureau of Transportation, 3.3 million people travel at least 50 miles to work just one way. That amounts to nearly $95 per week, which is an excellent excuse to convince your boss to let you work remotely.
What can you do to reduce your gas expenses?
Here are some simple suggestions as well as more large-scale options to reduce your miles on the road or to decrease the price at the pump.
- Look into a vehicle with better mileage. Obviously, this is one of the more costly solutions, but it bears mentioning. If your vehicle guzzles gas, especially while gas prices are high, that’s not a good thing. Look into commuter cars with better average annual car mileage, hybrid vehicles, or even electric vehicles.
- Get a store membership or gas discount card. There are many options for getting discounts at the pump. Some of the more significant discounts involve memberships at stores like Costco or loyalty points at gas stations like Maverick. Each will reward you just for choosing their gas and for being their customer.
- Slow down on your commute to conserve fuel. According to fueleconomy.gov, gas mileage efficiency drops above 50 mph. In addition, every five miles above 50 mph could cost you around 22 cents more for each gallon of gas.
- Join the work-from-home movement. This might be obvious, but if you want to save money on your commute, then stop commuting. Millions of Americans began working from home over the past several years because of the coronavirus pandemic. That means huge gas savings each time they don’t drive into the office and log in instead.
- Ensure your tires are properly inflated. Car maintenance can be great for your vehicle and your pocketbook. Did you know 25 billion gallons of gasoline are wasted each year due to underinflated tires? A tire that’s underinflated by 10 psi can reduce fuel economy by about 3.3%.
In the end, choosing to decrease your vehicle’s gas usage also helps the planet by reducing your own carbon footprint. It’s basically a win-win for both your wallet and the planet.
Public Transportation Could Mean Huge Savings
The rising price of gas might also be a good time to consider public transportation options. According to an American Public Transportation Association Transit Savings Report, a person’s average annual savings is $9,946 should they switch from a daily commute to public transportation.
That means you could stand to save more than $829 per month by selling your car and hopping on a bus or train to get to work. If we tie it all back to emissions, too, this is another awesome way to decrease your personal contribution to greenhouse gases.
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Luke Williams writes and researches for the car insurance comparison site, Insurantly.com. His passions include best practices for insurance and ways people can save more money.
