Mar 21, 2022
What to Do About Those Mind-Boggling Gas Prices
The cost per gallon is continuing to surge. There are a few things you can do to cushion the blow to your wallet.
Whenever you stop at the gas station to refill your car these days, you get a little lesson on budgeting and how the economy works.
Gas prices have been steadily rising for months, a trend doesn’t look like it will end any time soon. The increasing prices are a top concern for U.S. consumers, who have seen their recent pay increases diminished every time they pay at the pump.
As of March 21, 2022, the average price per gallon for regular gas in the United States is $4.252, up from $2.882 a year prior. Certain states, particularly on the West Coast, are seeing even higher gas prices. In California, for example, the average price for a gallon of gas is $5.855. And the increase in gas prices is having a ripple effect, pushing up the prices of things like plastic and fertilizer, which are made with petroleum or natural gas.
Spending more on gas could mean you have less money to spend on essentials, or put towards your savings. But there are some ways you can plan and budget for this bigger expense.
Why are gas prices rising?
Most immediately, Russia’s invasion of Ukraine has caused gas prices to spike, and is likely to keep them inching upwards. President Biden banned imports of oil, gas, and coal from Russia in mid-March. Although Russia is one of the world’s biggest oil and gas producers, its products account for only 4% of U.S. imports. The ban has still sent oil prices higher because of a ripple effect the restrictions are having on other parts of the oil import pipeline, particularly as more oil extractors pull out of Russia.
Another reason for higher gas prices is higher demand from consumers. Initially at the start of the pandemic in 2020, as people spent more time at home, oil prices reached record lows and the Organization of the Petroleum Exporting Countries (OPEC) and its allies reduced oil production to maintain prices. But as consumers have hit the road again, and demand has returned, OPEC has been slow to increase production, further driving prices up. U.S. oil manufacturers could also be slowing production, over concerns of possible new environmental regulations.
And increasing prices at the pump are having an impact on inflation, which is at its highest level since the 1980s. The Consumer Price Index (CPI), a cost of living index that measures the value of goods and services consumed by people in the U.S., has been steadily on the rise in recent months, peaking at 7.9% in February 2022, according to the Bureau of Labor Statistics (BLS). The index measures the monthly percentage change in prices paid by urban consumers on goods and services. While the price of gas makes up only 6% of the index, it has risen 6.6% month-over-month, and 38% year-over-year.
An international response
The Biden administration has said that it will take some steps to try to stem price hikes. Foremost, the U.S. and other wealthy nations will release 60 million barrels of oil from strategic reserves, coordinated through the International Energy Agency. Of that amount, the U.S. will release 30 million barrels from the U.S. Strategic Petroleum reserve. This is only the fourth time since the 1970s that the agency has overseen a coordinated release to fight high oil prices. Biden reportedly may try to seek oil from countries such as Venezuela, Iran, and Saudi Arabia, although that move risks some political fallout, as these are nations with sometimes problematic relationships to the U.S..
Here’s what you as a consumer can do to budget for increasing gas prices.
Plan where to get gas
Consumers don’t really shop around for gas. Instead they tend to have loyalty to specific stations. One way to control your gas costs is to plan when and where you’re going to fill up. If you’re the type of person to wait until you’re running on empty to get gas, you may want to rethink that approach. If you know when you’re going to need gas, you can plan ahead so you don’t have to fill up at the nearest gas station, which could be more expensive than another location.
Find a gas station with affordable prices, by driving around or searching online. Consider downloading a gas-price app to find the most affordable gas providers on your route, recommends Robert Walden, editor-in-chief of Seattle, Washington-based car maintenance blog VehicleFreak.com. Apps like GasBuddy, Gas Search, and Gas Guru can all be helpful. Some map apps like Waze and Google Maps can also come in handy.
Planning when you get gas is also important. Walden recommends heading to the pump at the beginning or end of the work week. “Gas is usually cheapest on a Monday or a Friday, given that there is more demand for gas during the work week,” says Walden. He also suggests filling up at night since “gas demand is lower during the nighttime hours, so prices could be reduced.”
Use a rewards card
Be mindful of how you pay for your gas. If you use a credit card, take a look at your card’s benefits to see if you get a certain amount of points or rewards for using your card at a certain type of station. You might get a few percentage points of your gas expenses back if you use that card. You can also sign up for a card from gas chains like Speedway or Mobil, Walden says. If you’d rather use a debit card, remember that you can earn rewards in the form of stock with Stash’s Stock-Back® Card.¹
Discount and wholesale stores also sometimes offer better prices, so you might want to invest in a membership. “A wholesaler such as Costco can afford to invest in vast quantities of gasoline,” says Ian Lang, senior car advice editor at Bumper.com, based in New York, New York. “Despite the increased gas prices, Costco continues to benefit from bulk purchases.” You can get a membership to Costco, BJ’s, or Sam’s Club for prices ranging from $45 to $120 per year.
Consider asking for a stipend
Your employer might offer certain benefits for using your car to get to and from work. If you haven’t taken advantage of those benefits yet, it might be a good time to explore them. Particularly in the age of Covid-19, some employers are offering stipends for commutes, travel, cellphones, home offices, and more. Check your employee agreement or with your human resources department to find out. And if you don’t receive a stipend, think about approaching your manager to ask for one.
You might also be eligible for a tax break if you use your car for work, or are self-employed. The Internal Revenue Service (IRS) allows you to deduct some of the money you spend on gas if you work for a company that requires you to use your car, or if you have your own business and drive for work. For the year 2022, workers who use their car for business can deduct 58.5 cents per mile. Taxpayers can claim a mileage deduction with the Schedule C tax form.
Gig workers who drive for companies such as Uber, Lyft, and DoorDash are considered contract workers, and must typically pay for their own gas. In response to rising fuel prices, some ride-hailing companies offer drivers rewards cards that can help offset the cost of gas, while others reportedly have raised prices to compensate for higher gas prices.
Note: Stash does not offer tax advice. Consult a tax professional for advice about your tax situation.
Ask for an inflation-based raise
In addition to a gas stipend, you might think about asking for an inflation-based raise, if you think it’s feasible. Most employers offer 3% to 5% when they give workers a raise, according to Indeed. But that percentage is well below the current inflation rate. So take that into consideration if you’re ready to ask for a pay bump.
Another thing to keep in mind when you ask for a stipend or a pay increase is the current job market. A record number of people have quit their jobs in recent months. In November 2021, 4.5 million people quit their jobs, while the number of job openings stayed roughly the same, according to the Bureau of Labor Statistics. Because of this “Great Resignation,” workers may have more leverage than usual when asking for what they want.
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¹Bank Account Services provided by and Stash Visa Debit Card (Stock-Back® Card) issued by Green Dot Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Visa is a registered trademark of Visa International Service Association. All rewards earned through use of the Stash Visa Debit card (Stock-Back® Card) will be fulfilled by Stash Investments LLC. Rewards will go to your Stash personal investment account, which is not FDIC insured. You will bear the standard fees and expenses reflected in the pricing of the investments that you earn, plus fees for various ancillary services charged by Stash. Stash Stock-Back® Rewards is not sponsored or endorsed by Green Dot Bank, Green Dot Corporation, Visa U.S.A., or any of their respective affiliates.
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