The national average price of gas reached over $5 for the first time ever, according to AAA, a burden shouldered by American consumers and hindering action against climate change.
The biggest factor in rising prices is the high cost of crude oil. In April, 60 percent of the price of regular unleaded gallon of gasoline accounted for crude oil prices, which are now over $100 a barrel.
The rising cost of gas comes at no surprise amidst recent world affairs; crude oil prices rise as the pandemic slows, sanctions on Russia after its invasion of Ukraine and executives hesitate to drill new wells.
Gas demand has increased as pandemic restrictions lift globally, and while oil storage tanks were once full in 2020 from several years of oversupply causing prices to plummet, the private industry is left wary to facing massive losses yet again.
The Biden Administration is asking U.S. oil companies to increase output in the short-term, with little success. Ten years from now, electric vehicles may dry up profits, furthering executives’ decision to not drill, according to an energy economists at MIT.
Who’s Hurting?
JPMorgan estimates the nation will reach an average of $6 a gallon later this year, meaning the average U.S. household will spend $4,600 per year for gas. At $6 a gallon, households that make up to $40,000 a year will spend between 11 to 28 percent of their after-tax home pay on gas. For rural households, the numbers only increase, as residents travel longer distances and typically earn less than urbanites.
In two scenarios considered by Moody Analytics, where gas prices rise to $6 and $7, respectively, unprecedented gas prices would cut consumer spending on other commodities and reduce overall GDP growth. But growth would still remain positive, and imbalances would eventually sort themselves out, returning to baseline gas prices in mid-2023.
Central Texas meals on wheels struggle to continue operations under the rising prices, where volunteers use their own cars to deliver. They’re currently $6,000 over their monthly gas budget. Many self-employed food delivery drivers in upstate South Carolina have quit as gas expenses outweigh profits. Burdened with 20-ton trailers of tractors and equipment, landscapers in Conn. are spending double their typical monthly gas costs and adding to their contracts that charges will rise with fuel costs. First responders in Fort Worth, TX., spend over $127,000 more for gas this year than last, and rural EMS agencies that travel long distances face a larger financial burden, like in Denver, Iowa, whose budget is based on prices from the previous year and where diesel-fueled ambulances travel 50 miles or more per call. The Milwaukee Fire Department’s fuel costs have doubled since January, whose 55 to 65-gallon fire engines get less than 4 miles per gallon.
The fight against climate change is hurting as well. Most countries have not passed laws reducing oil demand by targeting consumers through taxes or mandates, and instead pass options that indirectly reduce oil consumption.
What can be done?
President Joe Biden is authorizing a 1 million barrel release from the national Strategic Petroleum Reserve, announced a temporary cut on the federal gas tax and is urging states to do the same for state tax. Lowering gas prices may be in Biden’s best interest for re-election and give an opportunity to put forth climate action in office, but this enables high prices and high demand from consumers. If gas production is cut and Americans consume the same amount, demand will exceed supply, digging the nation deeper into fossil-fuel dependence.
John Kerry, the U.S. special presidential envoy for climate change, warned at the TIME 100 summit that the war in Ukraine and suggestions to pump more oil could undermine international progress to cut carbon emissions.
A report from the UN earlier this year shows we’re running out of ways to address the climate crisis, and a delay in solutions can cause irreversible damage. Research backs that renewables and electrification are the best solutions to the climate crisis, and continued reliance on gas would undermine energy security and is associated with serious high-emission lock-in, transition, and physical climate risks.
A switch to renewable energy would certainly be the cheapest solution– in 2020, renewables like wind and solar were the world’s cheapest energy sources. Yet for average consumers, switching to electric cars becomes more expensive each year.
One solution might be the ocean. A group of 93 environmental groups, aquariums and outdoor recreation brands is urging the Biden administration to turn to the ocean to fight climate change. The report states ocean has the capacity to provide one-fifth of the emissions reductions needed globally to limit temperature rise to 1.5°C.
If governments don’t pass laws directly supporting alternative energy solutions and target supply instead of demand for fossil fuels, it may be up to American consumers to change their transportation methods to reduce gasoline use through alternative methods of transportation like buses, bikes, trains or switching to electric vehicles.
