- Personal Finance
How High Gas Prices Affect Consumers
Summer 2011 - High gas prices in America are shifting how the average person spends their money. Economists have long speculated about which changes will occur as gas prices rise, but new statistics are showing definitively what happens to household budgets when gas prices rise. Consumers have to spend their money more carefully, change their regular behavior, and endure fuel surcharges and fees from the businesses where they shop.
High gas prices in America are not going away anytime soon. Unrest in the world's top oil producing regions means the price will continue to fluctuate until things settle down or the government finds new, cheap fuel sources. Until then, understanding how high gas prices affect consumers can help you make smarter gas choices.
High Gas Prices = More Careful Spending
When gas prices go up, consumers need to spend their money more carefully. Since US salaries aren't increasing, a limited number of dollars have to be stretched to cover rising gas costs, and gas costs eat up a larger share of income. For many Americans, gas prices are equal to 8.8% of the total household budget.
That number is on the rise, but total gas station receipts aren't increasing as fast as the gas price. Consumers are eliminating extras at the gas station check out line, cutting back on candies, sodas, and other snacks that they used to purchase.
Many Americans are cutting back in other ways, too. Retail receipts are flat, and restaurants are struggling. Regardless of what you believe is the truth about high gas price causes, the economy is going to continue to limp along if consumers don't feel like they have any income to spare. Watching every penny and being more careful about purchases is smart for individuals, but hard on the national economic situation.
High Gas Prices = Changed Behavior
As a result of high gas prices in America, millions of people are changing their driving and gas buying behaviors. A chart of the average US gasoline consumption levels shows that America's gas consumption is tapering off instead of shooting up. This is directly related to higher gas prices.
Many Americans no longer drive for fun, and they are paying more attention to driving economically. Truckers are being more careful about planning driving routes, and more Americans are taking public transport or carpooling, notes the Wall Street Journal. As a nation, it seems that we have accepted that it's just too expensive to waste time in the car, and we're getting a lot more open to alternative driving arrangements.
High Gas Prices = Fees & Fuel Surcharges
It used to be that airlines were the only ones charge fuel surcharges and fuel cost fees. Now, businesses of all sizes are adding fuel surcharges to the bill. Some of these fuel surcharges are dependent on the price of fuel, while others are here to stay.
As a result, consumers have to be more careful about reading the fine print where they shop. High fuel prices and fees can make products unaffordable, or motivate a search for a service provider closer to home. Businesses, by the same token, have to be careful not to price themselves out of their market, and need to be sure they are not perceived as gouging consumers with fuel surcharges and fees.
High gas prices in America seem to be here for the foreseeable future. While we all adapt by changing our behavior, spending more carefully, and paying fees to businesses to cover fuel costs, it will be a wonderful day indeed when gas prices in America finally come down.