Who Gets Hurt From High Gas and Diesel Prices? There’s More Harm Than You Think. (2024)

High gas and diesel prices like those we are experiencing now have sweeping negative economic effects on Americans. Beyond the financial hit at the pump, the economic harm is inflicted in many ways that may not be evident to most.

For example, prices for goods such as food, clothing, and household goods are higher than they otherwise would be since gas and diesel play an important role in supply chains. And there could be higher costs and reduced services for critical functions like police and emergency medical services because of their heavy reliance on fuel to carry out their duties.

Americans have recently experienced this firsthand as prices have skyrocketed. As of the week of September 12, retail prices forregular gasolineaveraged $3.69 per gallon, 54% higher than when President Joe Biden took office in January 2021.Diesel pricesare 84% higher, averaging just above $5 per gallon. And these are below the record highs we saw this past summer.

The following explains the importance of motor gasoline and diesel in general and highlights just some of the harms caused by these significantly higher prices.

Importance of Motor Gasoline and Diesel

Energy affects almost every facet of American life, and data show just how critical gasoline and diesel are for Americans.

One of the most important energy sources is petroleum, which, as the Energy Information Administrationexplains, has historically been the largest majorenergy sourcefor total annual U.S. energy consumption. Petroleum is used to create many products, including motor gasoline and diesel, and in 2021, petroleum metaround 90%of America’s transportation needs.

Motor gasoline (the most consumed petroleum product)accountedfor about 44% of total U.S. petroleum consumption.

Distillate fuel oil, which includes diesel fuel and heating oil, was the second most consumed petroleum product in 2021 atabout29% of total U.S. petroleum consumption. Diesel fuel is used for transportation such as buses, boats, trains, and some cars, but it’s also used for heavy construction equipment, tractors, and electricity generation.

Harm of Higher Prices on American Families

Cars play a central role in the lives of most Americans, enabling them to engage in their daily lives, from going to work and taking their children to school to shopping and visiting relatives.Census Bureau datashow that 92% of American households have access to at least one vehicle. Higher gas prices make it more difficult to engage in these ordinary life activities.

Some on the far left have arrogantly dismissed the harm caused by high gas prices. For example, last year, Transportation Secretary Pete Buttigieg captured the left’s electric vehicle elitism when hetoutedelectric vehicles as a solution to high gas prices.

This ignores the high costs andpractical problemsof electric vehicles. And despite decades of subsidies, according to Department of Energydata, electric vehicles constituted only 0.5% of all vehicles registered in 2021. For example, EV sales in 2021 were very low, accounting forless than 5%of overall vehicle sales.

Regardless of this extremewishto see thedemiseof gas-poweredvehicles, the reality is that most Americans rely upon motor gasoline to power their cars. High gas prices not only hurt Americans regardless of income level, but they also disproportionately hurt the lowest income households the most because those households spend agreater shareof theirafter-tax incomeon meeting basic needs, including purchasing gas.

For these lower-income households, the sacrifices they are required to make due to high gas prices may not simply mean giving up luxuries, but also giving up necessities, such as whether to visit the doctor or run the heat in the colder weather.

There’s alsoevidenceindicating thatruralhouseholds are disproportionately affected by high gas prices. This is due in part because rural Americans have to travel further distances and tend to drive older, less fuel-efficient vehicles. Based on an Iowa State University study, rural households spent20%more than urban households on gasoline and diesel.

Harm to the Economy

The harm to Americans when filling up their gas tanks is only part of the picture. High gas and diesel pricesdriveupcostsforindustriesacrosstheeconomy, and this can lead to consumers incurring some of these costs through higher prices of many goods and services.

One useful example is to look at the trucking industry because of the clear impact diesel prices can have on the industry and the industry’s far-reaching effect on the entire supply chain and economy.

Of the 15 million registered commercial trucks in the United States,76%are diesel powered. The trucking industry is responsible for transporting approximately72%of U.S. goods (based on value) or,accordingto the latest data from the U.S. Census Bureau, “$10.4 trillion of the $14.5 trillion of the value of all goods shipped in the United States in 2017.”

The trucking industry transports goodsrangingfrom pharmaceutical products, plastics and rubber, and vehicle components to meat and poultry.

High diesel costs can hit truckers especially hard since the trucking industry is predominantly comprised of small businesses, with about92%of motor carriers operating a fleet of six or fewer trucks, and approximately97%operating a fleet of 20 or fewer trucks.

As truckers haveindicated, high diesel prices could significantly reduce their mileage or hours, and in some circ*mstances, potentially lead them to stop driving altogether. As it is, the American Trucking Associations argued that in 2021, the trucking industry was already short around80,000 drivers.

Fewer truckers or less driving would increase costs for businesses that utilize truckers to transport their goods (due to basic supply and demand laws). Further, to the extent that truckers can pass on their costs, that would mean higher costs for their business customers who could then pass on the costs to their customers.

Harm to First Responders

Theeffecton first responders provides a good illustration that the harm of high fuel prices may not always be obvious. Significant fuel price surges could leadpolice forcesto adjust budgets and make cutbacks or reduce the driving of marked cruisers,lesseningthe police presence in communities. It could also lead police officers toavoid idlingtheir cars in order toconserveon gasoline, which could limit the ability of officers toutilize equipmentin their patrol cars like video and audio systems.

Based on interviews with first responders, we know that thefiscal effectscan be significant forEMSprovidersin rural areas. In theseregions, first responders travel greater distances and therefore utilize more gasoline. And for some areas where fuel budgets have recently been exhausted, first responders areattemptingto handle as many calls as possible over the phone before deploying emergency services.

It cannot be overlooked then that higher prices impact strategy and methodology for first responders.

Conclusion

From the gas used for cars to the diesel used to operate farm equipment and transport goods across the country, the lives of Americans benefit tremendously through these fuels. And when prices surge to especially high levels, this inevitably causes significant harm, especially to the poorest Americans.

For policymakers, any response to high prices should be to remove the manygovernment barriersthat drive up fuel prices. At least then, prices would be a reflection of market forces and not government meddling that is causing unnecessary harm.

This piece originally appeared in The Daily Signal

Who Gets Hurt From High Gas and Diesel Prices? There’s More Harm Than You Think. (2024)

FAQs

Who Gets Hurt From High Gas and Diesel Prices? There’s More Harm Than You Think.? ›

High gas prices not only hurt Americans regardless of income level, but they also disproportionately hurt the lowest income households the most because those households spend a greater share of their after-tax income on meeting basic needs, including purchasing gas.

Who is most affected by gas prices? ›

That said, rising gas prices do affect both consumers and the economy adversely, and they are especially harmful to lower- and moderate-income households. One assumption is that these households do not all own cars, that many use mass transit instead.

How diesel prices affect the economy? ›

But analysts say diesel can have a bigger impact on inflation because the fuel powers trucks, industrial machinery and agricultural equipment. The prices of heating oil and jet fuel are also closely connected to the price of diesel.

How gas prices affect consumer behavior? ›

Gas prices have a hold on consumers because they dictate how Americans shop and spend on other necessities, and they can influence travel behavior temporarily. Over time, they can even influence what vehicles consumers purchase, the appeal of far-flung housing and even development patterns, according to the Times.

Why is diesel getting so much more expensive than gasoline? ›

Demand is quite simply always higher for diesel fuel. Freighters, tractors, trains, forklifts, construction equipment—even container ships—all need diesel to run, and that demand is steady. But one barrel of crude oil only produces about 11-12 gallons of diesel, compared to 19-20 gallons of gasoline.

Who actually controls gas prices? ›

Petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump.

Are high gas prices hurting the economy? ›

When gas prices rise, it can be a drag on the economy—impacting everything from consumer spending to the price of airline tickets to hiring practices.

Why has diesel become so expensive? ›

It's the excise taxes, the higher sales taxes and then California has a couple of programs for reducing greenhouse gases, such as its cap and trade program and the Low Carbon Fuel Standard (LCFS).” (This chart spells out the history of excise tax increases in California.

Has diesel fuel ever been cheaper than gasoline? ›

Was Diesel Always More Expensive Than Gas? No, diesel wasn't always costlier than gas. As per the U.S. Energy Information Administration, until 2004, gasoline was more expensive per gallon than diesel. But after that year, diesel prices in the United States have always been more than the unleaded fuel.

Do gas prices affect food? ›

Simply put, oil and gas corporations are contributing to the high cost of food. While economically vulnerable Californians are still struggling to recover from the impact of the COVID-19 pandemic, this crisis is only deepening the state of hunger.

What are the negative effects of high gas prices? ›

Harm to the Economy

High gas and diesel prices drive up costs for industries across the economy, and this can lead to consumers incurring some of these costs through higher prices of many goods and services.

How do people feel about gas prices? ›

At least 7 IN 10 CONSUMERS SAY THAT GAS PRICES IMPACT THEIR FEELINGS ABOUT THE ECONOMY, and that percentage rises when gas prices increase. Consumers have a POSITIVE OPINION about convenience stores—nearly two in three consumers (63%) say convenience stores share their values.

Why is diesel $2 a gallon more than gas? ›

The transition to less polluting, lower-sulfur diesel fuels in the United States affected diesel fuel production and distribution costs. The federal excise tax for on-highway diesel fuel of 24.3 cents per gallon is 6 cents per gallon higher than the federal excise tax on gasoline.

Why do diesel engines last longer? ›

Diesel is more energy-dense than petrol. That means a diesel engine can output the same amount of power at lower RPM (revolutions per minute). Fewer revolutions means less wear and tear on engine components like piston rings, crank bearings and valve seals, which can greatly extend the engine's life.

Is diesel bad for the Environment? ›

Diesel fuel (refined from crude oil) produces many harmful emissions when it is burned, and diesel-fueled vehicles are major sources of harmful pollutants, such as ground-level ozone and particulate matter.

How many people struggle with gas prices? ›

58% The rising cost of gas is a major issue for many Americans. The latest Monmouth University Poll, released Thursday, found that a majority (58%) say it's difficult to afford gas.

What is causing the rising gas prices? ›

Gas prices always rise at this time of the year. The end of winter means higher demand for fuel as the weather warms up. It also means the end of cheap winter fuel and the switch to the more expensive summer fuel blend, a process that is just getting started in most states.

Why high gas prices fall harder on lower earners? ›

That's because low earners funnel a bigger share of their budgets to transportation costs and other staples, like food and energy, relative to wealthier households.

Top Articles
Latest Posts
Article information

Author: Errol Quitzon

Last Updated:

Views: 5979

Rating: 4.9 / 5 (79 voted)

Reviews: 94% of readers found this page helpful

Author information

Name: Errol Quitzon

Birthday: 1993-04-02

Address: 70604 Haley Lane, Port Weldonside, TN 99233-0942

Phone: +9665282866296

Job: Product Retail Agent

Hobby: Computer programming, Horseback riding, Hooping, Dance, Ice skating, Backpacking, Rafting

Introduction: My name is Errol Quitzon, I am a fair, cute, fancy, clean, attractive, sparkling, kind person who loves writing and wants to share my knowledge and understanding with you.