Gas Prices on the Rise: Are You Ready?

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While the increase in gas prices has increased costs for all commuters, workers from households whose income is below the federal poverty level pay a larger proportion of their income for gas.This fact sheet uses data from the 2006 American Community Survey to quantify the relative burden of gas use for commuting.


Public Transportation
Rising fuel prices the last few years have led to significant increases in costs for public transit agencies. As fuel prices continue spiraling upward, the added costs are a significant concern for transportation officials. A possible benefit from higher gas prices, though, is an increase in public transit ridership. As the cost of fueling a car increases, people may seek out ways to reduce fuel consumption, and one such option is public transit. If an increase in gas prices leads to a rise in transit ridership, then fare revenue would increase, and the added fuel costs for the transit operator would at least be partly offset. A number of news reports across the United States have indicated that transit ridership has increased with the rise in gas prices, but few studies have been conducted to confirm this relationship or measure the extent of it.


Conversely – Markets can be on edge if there is a rapid fall of oil prices. This is of particular concern for countries which produce oil –  Russia, Iraq, Venezuela. Oil sales are an important part of their incomes.  For every $20 decline in the price of a barrel of oil, you should expect about a 50 cent decline in the price of a gallon of gasoline. And that is what we’ve seen.


Home Buyers
Home buyers have been making the trade off for years – the further away from metropolitan centers a home is located the cheaper it is likely to be. There are exceptions to this, of course, but generally consumers have been willing or maybe forced to exchange time for money, frequently commuting 40 or 60 or 80 miles each day between a nice home in the suburbs to their job in the city or in another far-flung suburb.

Since higher energy prices will not be restricted to the gas pump, there could be profound repercussions on the cost of constructing homes and of operating them. First of all, it is a given that costs of material such as lumber and especially products which are petroleum-based are going to increase. Prices for materials will start a multiplier effect as transportation and ingredient costs and the energy required for production all rise. For example, dimensional lumber will cost more to cut in the field (oil to run the saws, cranes, and tractors) transport to the saw mill, run through the mill, and transport to wholesale and then to retail markets. Costs along each step will be passed on to the consumer.

High fuel costs also directly affect the expenses of shipping and transportation companies, including giants United Parcel Service Inc. (NYSE: UPS), FedEx Inc. (NYSE: FDX) and the U.S. Postal Service. Because most such companies don’t hedge against oil price increases, the heavier burden of running their delivery fleets is absorbed by consumers and other businesses.



In Your Community

Think on this why do the prices of gas surge every year?  Is there a correlation between the time prices rise and current events around the world and on the street where you live?

  1. Consumer Spending – gas prices rises shopping at the mall decreases;
  2. Car Shopping – gas prices rise, hybrid sales rise;
  3. Automakers spend less – loss of jobs;
  4. Confidence suffers – depression rises, physician visits rise and depression medication surge;
  5. Grocery Shopping – Cost to ship the food rises; if you are on food stamps the amount of food you are able to purchase decreases;
  6. Salary – does not increase with the surge in gas prices, what local trips will you avoid to compensate? Movies, Town Hall Meetings, PTA meetings, Voting

The next time you driving around town and on Monday the gas is $1.89/gal and on Thursday of the same week the gas is $3.20/gal; ask yourself the question:



black-woman-scratching-her-headWhat other item(s) have I ever purchased from the grocery store, Walmart or even The Dollar Store – did the price rise on that item which was in stock the week before?







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