Pain in the Gas: Volatile Gasoline Prices Wreak Havoc on Household Finances
This coming Memorial Day weekend kicks off the summer driving season across our nation just as prices at the pump leave Americans paying more for gasoline than at any time in the past quarter-century. Rising yet highly volatile gas prices make it difficult for families to predict where gas prices will be in the future. That makes it even harder to budget commuting expenses for the year or plan a summer vacation or weekend trip.
A new report by the Center for American Progress titled Pain in the Gas: Volatile Gasoline Prices Wreak Havoc on Household Finances, calculates the cost of this volatility on average workers commuting to and from work and families heading out on classic American vacation road trips this summer. If gasoline prices continue to rise—as some, including Secretary of Energy Samuel Bodeman, believe they will—then the budgets of Americans nationwide are in for serious hits.
This new report considers the consequences for commuters and vacationers who calculated their monthly spending this year on average gasoline prices of $2.31 per gallon at the end of 2006. By May of this year, average prices were $3.10 per gallon, which means the average commuter has only 75 percent of the money budgeted to get to and from work each month. Should prices at the pump reach $3.50 per gallon then this commuter has only 65 percent of cost of commuting covered. At $4.00 per gallon, the average commuter has set aside only 55 percent of the cost of going to work each month.
For American families planning their annual summer vacation, the consequences are even more telling. At today’s average price of $3.10 a gallon, a family traveling from New York City to the Outer Banks of North Carolina for a week at the beach would run out of gas in the Chesapeake Bay Bridge tunnel if the only cash on hand for gasoline was what they had budgeted for at the beginning of year, when gas prices were at $2.31 a gallon. At $3.50 per gallon this family would barely cross the border between Maryland and Virginia on the Eastern Shore before running out of gas money near Keller, Virginia. At $4.00 per gallon, this family would be spending their vacation in St. James, Maryland—179 miles short of their destination.
American families traveling this summer from Chicago to Nashville, Baltimore to Myrtle Beach, Los Angeles to Lake Tahoe, Detroit to the Upper Peninsula or Atlanta to Tampa Bay face similarly sudden and daunting gasoline costs. These travelers, of course, are not going to vacation wherever their budgeted money for gasoline can carry them. But as Logan and Weller point out, the consequences of finding the money they need to make the rest of the trip is wreaking havoc on household finances.
Rising yet volatile gasoline prices at the pump leave Americans today paying more for gas than at any time in the past quarter-century—and leaving families unable to accurately plan their weekly, monthly, and yearly expenditures. As commutes and other drives remain fairly constant, families have to adjust to large price swings at the gas station by buying less of other items or by dipping into their savings. More stable gasoline prices would make it easier for families to plan their daily lives and expenditures, maintain savings, and likely contribute to more economic security.
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To read analysis and policy recommendations by the Center for American Progress on energy matters, please go to the Center’s Energy and Environment web page or see:
- Poll: Americans Urgently Want Action on Energy Independence and Global Warming
- Gas Prices Should Fuel Action
- Coal’s Triple Play
- Cleaner Cars, Stronger Companies
- Farming a New Fuel Economy
- American Energy
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