Katie, Texas — Most Americans will be happy to pay $ 4.29 for a gallon of regular petrol, which is more than 50 cents below the national average, on Interstate 10 between Houston and San Antonio this week.
But even Texas people are complaining, at prices over $ 1.50 per gallon higher than they were a year ago, and are changing their buying habits to do so.
Nancy Onken, a former kindergarten teacher, said when she filled up her station wagon on a long weekend at a water park outside San Antonio while joining her five cousins, “just thinking about buying petrol was very stressful. I will. ” She said, “Being conservative about what I buy is now always at the bottom of my heart.”
As Onken drives Buc-ee’s, a well-known Texas-scale convenience store with enough petrol pumps to fuel the army, she decorates with a cartoon-style backtooth beaver wearing a baseball cap. I often buy bumper stickers, tumblers, or key chains for souvenirs. But this year she said she would keep holding her purse.
Now that gasoline prices have fallen by about 15 cents per gallon in the last two weeks, drivers will take a short break this July 4th weekend. However, as Russia’s invasion of Ukraine has settled into an attrition war and constrains global energy supply, gas prices are unlikely to fall further this summer.
At $ 4.84 per gallon on Friday, the national average price for regular gas was $ 1.72 higher than it was a year ago, according to the AAA Motor Club. Fuel prices are changing buying patterns and there are early signs that people may be rethinking driving.
Economists report that this year’s travel spending remains strong due to stagnant demand two years after the Covid-19 pandemic. However, interviews with drivers at Buc-ee’s in Katie, Texas suggest that consumer confidence is beginning to decline under the pressure of high prices for fuel, food and homes. Onken and several others said the holiday weekend is the only vacation this summer and could be a break from the past.
Gasoline prices have risen about 60% since last year, but total spending at gas station convenience stores has risen only 29%, according to a recent report by Mastercard Spending Pulse, which monitors retail sales across the country. It suggests that many people like are compensating. For gas prices by saving a little whimsical fun.
Michelle Meyer, Chief Economist in the United States, said: At Mastercard Institute of Economic Research.
The shock is especially severe given that people have become accustomed to lower gasoline prices during a pandemic where oil prices plummeted due to commuting and other declines in economic activity.
Understand inflation and its impact on you
It will take at least a few months to sort out all the impact of rising prices on consumer behavior. According to Mastercard, people are spending more in restaurants than they were a year ago, and luxury goods sales remain high. However, hotel industry executives say that many vacation drivers choose destinations closer to their homes to save on petrol.
This may be one of the reasons for the gradual decline in gasoline prices over the last few weeks. According to recent data from the Energy Department, the amount of gasoline sold nationwide has decreased by more than 2% year-on-year. A Houston car dealer said that while parts shortages have restricted the supply of new models, customers are becoming more interested in more fuel-efficient cars, electric cars and hybrid cars.
Some transportation and energy experts say that gas demand has declined this year as more people fly by plane instead of driving on vacation this year. In some cities, more people are returning to mass transit due to concerns about Covid’s mitigation.
Inflation and slowdowns in some parts of the economy can mean that some companies are reducing transportation or, if possible, shortening their supply chains to save fuel.
Giovanni Sachera, a transportation expert at the University of California, Davis, said that short-term high gas prices are fundamental to driving habits, as people still have to commute to work and continue their daily chores such as shopping and driving. He said he didn’t change. Children to school and activities.
“But if gas prices remain high for long periods of time, the only thing that will change is to start changing the type of car that Americans drive,” he said.
Over the last three decades, retail gasoline prices in the United States have risen by more than 30% year-on-year in 39 months, according to a report released this week by RBC Capital Markets. Of these months, demand fell by more than 2% year-on-year in only 12 times. “In short, protracted demand disruption events have historically been rare,” the RBC report concludes.
Inflation FAQ
What is inflation? Inflation is the loss of purchasing power over time. So tomorrow the dollar won’t fall as much as it does today. This is usually expressed as an annual change in the prices of daily necessities and services such as food, furniture, apparel, transportation and toys.
According to the same RBC report, 3.5 percent of total American spending is now spent on fuel. This is just below the average of 3.6% over the last 30 years.
“The real risk to oil demand and prices is when the economy begins to slow,” said Mark Finley, an energy economist at Rice University.
Finley added that high gasoline prices have overwhelmed consumer confidence, despite being a relatively small part of the family’s budget. “There is a sense of crisis for those who say,’There’s something wrong here, so we need to be more careful,'” he said.
According to energy experts, low-income families, especially rural families, generally have poor fuel economy with older cars and travel longer by car, doubling costs. Gas consumption can consume up to 10 percent of their family’s income.
How high oil prices are depends on many factors, some of which are offset. Political instability in Libya and Ecuador is reducing global supply, but President Biden may be able to convince Saudi Arabia to produce more oil during his upcoming trip to the Persian Gulf. not. If China succeeds in curbing the Covid epidemic, it could increase the desire for oil and deprive the market of supply, but that is not certain.
And the process of war in Ukraine could determine how abundant Russia’s oil supply will be in the global market.
Fuel prices can skyrocket if the August and September hurricanes damage refineries and pipelines on the Gulf Coast.
US gasoline and diesel inventories in late June were at the lowest seasonal levels in more than a decade, primarily due to the closure or refurbishment of several refineries over the past two years.
This is a nuisance for Brenda Davis, San Antonio’s insurance client manager, who recently wrote to Katie. When driving Buc-ee’s, she usually picks up mud pie dishes and adds them to the dining set, but said she would resist this year.
“I’m trying to fill my budget,” she said. “The price is ridiculous.”
Lydia Depiris When Ben Casselman Report that contributed.
