The Affect of Rising Gas Prices on the Middle/Lower Class
Rising gas prices, one of the most controversial topics when talking about the American economy, are back again. What's causing the large hike in prices at the pump, and what can be expected in the future? Let's talk about it.
As we're all probably aware, gas prices across America have increased pretty drastically recently, in fact the average price per gallon has risen nearly 70 cents in the passed two weeks. The rise in price has caused many to tighten up their budget, leaving less for us to spend on everyday goods. With no clear end in sight, this could be tough for the middle and lower class to navigate.
What's Causing the Steep Increase in Price?
Some may be wondering why all of the sudden they are spending nearly 20% more on fuel? The price of gas has actually been on the rise nearly two years. Since May 2020, we've experienced relatively slow increase in the average cost per gallon, this is largely due to inflation, which as we know is causing the price of everyday goods to increase. But in the past two weeks, the sudden increase is due to the unrest overseas. The Russian invasion on Ukraine has us all in fear of what could come next, and has us concerned for what's happening right now in Ukraine. President Biden announced on Wednesday March 9th that the US will suspend all Russian oil imports into the US. With Russia providing the United States with nearly 10% of our oil, cutting off that source is causing panic. We are now forced to find a replacement for that 10%, or look into other alternatives. This is hard on the US as we are already dealing with supply chain issues, so adding what could be a shortage in oil would be a huge blow to our nations already weakening economy.
What's Next?
With no clear end in sight, predicting what's going to happen next can be tough. We've heard President Biden say that our sanctions on Russia are here to stay, and knowing our current administration is pushing to clean up our environment, it could be that our inflated gas prices are going to stick around for awhile. The unrest in Ukraine also appears to have no end in near sight, so it's safe to say that all eyes will be on what the next move is in Eastern Europe. The bottom line is that the American dollar isn't going near as far as it did even a few months ago, and we'll be on the lookout for what steps are taken to try and reverse that trend. Until then we must bunker down and do what we can to cut out excess spending, and allocate more dollars to the necessities.
Tanner Millar
Investment Advisor - Core Planning
tanner@yourcoreplan.com
(660)-998-4639
https://www.yourcoreplan.com/disclosures