With the 2018 summer driving season rapidly approaching, the average price of a gallon of gasoline is about 45 cents higher (or 20%) than last year according to AAA as well as independent websites such as Gasbuddy. The increased cost is draining money from the pockets of every car owner, and this increased cost hits lower income families the hardest.
Now while of course no one knows what the future may hold, some experts say the price over the very short term may go up several more cents as we get closer to Memorial Day. It may go up more in the summer as refiners switch their blends to the cleaner gasoline version (which happens each year), the strong economy/demand, Iran, and other factors. While it seems like experts say the national average won’t quite get to $3 per gallon, who really knows at this point?
The fact is higher prices cost Americans money. AAA estimates that a 10 cent increase costs the average American driver $130 per year. So with prices about 45 cents per gallon higher in May 2018 than in May 2017, this means that Americans will be paying roughly $600 more per year for their gasoline. This could put more families into a financial hardship, and more people may need help with food costs, paying for housing, and other bills.
Cost to American households
With prices about 45 cents per gallon higher that would cost American drivers about $600 more per year in gasoline expenses. But of course that means the 45 cent increase needs to be sustained over the course of a year, and no one knows if that will occur or not. Low income families who drive and commute to work will feel this impact the most. But there are some (granted not common) programs that may provide assistance, and find free gasoline vouchers for work or job training reasons.
However the consensus seems to be the price may go up a little more due to withdrawal from the Iran nuclear deal as well as strong world economy and OPEC cutbacks. Or it may go down slightly as more production comes online. But experts do not think we are going back to the low $2 average. In other words, the price may be close to about where it is now at around $2.80 per gallon.
If the higher prices do hold true in 2018 and future years, then be prepared to spend more money. Whether it is $100 more per year or $600 more, the safe bet it will probably be somewhere between that range. All households should start to budget accordingly for the higher cost, as low income families and those living paycheck to paycheck will be most impacted. Budget more for gasoline so it does not impact other bills you may have, such as for housing or food.
Also, if you are in the market for a new car, start to look at fuel economy. Buy a more fuel efficient model (if the underlying car price is right) as it will save you money over time. Americans who drive to work have been spoiled over these last several years with low gasoline prices, but 2018 is changing that. Start to always think about fuel economy, gasoline expenses, and general transportation budgets.