In a press conference last week following his meeting with Prime Minister Fumio Kishida in Japan, President Biden praised the escalating price of gasoline as a positive step toward realizing the Democratic Party’s dream of enacting the Green New Deal.
“[When] it comes to the gas prices, we’re going through an incredible transition that is taking place that, God willing, when it is over, we will be stronger and less reliant on fossil fuels when this is over,” Biden said. Biden followed these comments by giving lip service to the millions of Americans forced to spend an increasing percentage of their disposable income on putting gasoline in their vehicles.
According to a study recently by economist Dr. Edward Yardeni, American families are now paying what amounts to $5,000 per year to put gasoline in their automobiles, a painful increase from just $2,800 a year ago.
In late May, the average gallon of gasoline in the U.S. hit a record high of $4.59, about 51 percent more than a year ago. By contrast, the price of a gallon of regular unleaded gasoline on January 20, 2021, the day President Biden took the oath of office, was $2.38/gallon.
Californians are now paying $6.00 for a gallon of gas, a level the rest of the United States may soon experience. “With expectations of strong driving demand in the summer months, the U.S. retail price could surge another 37 percent by August, to a national average of $6.20/gallon,” predicts Natasha Kaneva, the head of commodities research at JP Morgan.
On May 27, 2022, the U.S. Energy Information Agency (EIA) reported that the price of Brent crude oil (the world standard) had risen to $119.81/barrel. By comparison, the cost of Brent crude oil averaged $41.96/barrel in 2020, the last year of the Trump administration.
Natural gas prices in the United States have nearly tripled in the last year amid increasing supply fears. In late May, natural gas prices in the U.S. surpassed the $9.00 per million BTU (British Thermal Units), the highest price since the 2008 recession. “There’s almost no ceiling for natural gas,” Kent Bayazitoglu explained. “You can reduce your driving a lot easier than you can reduce your natural gas consumption.
At the end of May, more than a million households in New York City metropolitan area were 60 days in arrears on their energy bills, with an average of $1,427.71 in debt and shut-offs increasing. Middle-class Americans are experiencing the brunt of the current inflation spike. “For the middle class, a larger share of their budget goes toward gasoline,” explained Peter Mueser, a chancellor’s professor at the University of Missouri who studies labor economics.
“It’s time for Americans to get back to work and fill our great downtowns,” President Biden said in his 2021 State of the Union speech. But with the cost of gasoline rapidly edging toward $6.00/gallon, many Americans are questioning whether driving to work is worth the increased marginal impact rising gasoline costs have on their relatively fixed disposable income.