US-Iran war threatens energy supplies, sending domestic gas prices soaring
Gas prices have soared after a joint operation between the United States and Israel disrupted the supply chain for crude oil, the main raw material for gasoline.
Stephen Bolton, who sells Mercedes and drives his own cars for a living, says his biggest worry these days is the loss of household finances.
It used to cost the 38-year-old father of three about $70 to fill up his S-Class sedan on the 11-mile, 25-minute commute from his home in Warren, Michigan, to a Mercedes-Benz dealership in Bloomfield Hills. Now it’s closer to $120.
Bolton said he has had to tighten his belt because gas prices have dropped by $10 a day. He only orders lunch once or twice a week and takes money out of his 401(k) to pay his bills.
He’s also reevaluating his driving habits. The discussion is about replacing his Mercedes S-Class with a hybrid or electric car and enrolling his son in a kindergarten closer to home to avoid the additional 10 miles of driving.
“I hope it doesn’t go to $10 a gallon,” he said. “I hope that gas prices will return after the war.”
Fewer than seven out of 10 Americans who drive to work experience pump pain.
The average commuter spends 63 hours a year stuck in traffic. And as rising housing costs drive commuters away from city centers, these rush-hour jams will only get longer.
But since the Iran war has restricted oil supply routes, distance is not the only issue. It’s money.
The national average for regular gasoline has topped a multi-year high of $4 a gallon, and inflation-weary commuters are struggling to absorb the energy shock, according to AAA.
The average daily cost of commuting by car, which includes maintenance, tolls and parking, rose 11% to $17.17 per day, according to new numbers provided to USA TODAY by consulting firm Gartner.
If gas prices reach $5 a gallon, commuters who drive to work will pay $18.75 a day, or $2,719 a year, a 21% increase from prewar levels, said Caroline Walsh, managing vice president of human resources at Gartner.
“People are feeling it more and more.”
The national average for gasoline has already increased by more than $1 since February 28, the largest monthly increase recorded by GasBuddy. With no clear end to the Iran war in sight, Gasbuddy analyst Patrick de Haan predicts gas volumes will continue to rise.
Gas remains cheaper than it was during the last few geopolitical crises, and energy accounts for a smaller share of people’s spending. But transportation remains the second-largest household expense after housing, accounting for an average of 17% of spending, according to the Bureau of Labor Statistics. Together, housing and transportation costs account for just over half of the average family’s expenses.
De Haan said Americans have already spent nearly $8 billion on gasoline in the past month. Morning Consult’s Gas Price Surprise Index, which measures the net share of consumers who experienced higher-than-expected prices at the time of purchase, rose to 29.3 in March, the highest level since April 2024.
Commuters say they are rethinking their routines and combining errands to reduce the distance they drive as their mileage increases rapidly. They’re also cutting back on discretionary purchases and rethinking summer travel plans to compensate for soaring prices at the pump.
Mark Jeffries, 57, who rides his bike or bus to his nine-mile round-trip commute to work as a Cincinnati City Councilman, says he’s hearing about rising gas prices from his constituents, especially seniors on fixed incomes who are already seeing rising utility bills and other expenses.
“People are starting to feel it more and more and we’re hearing about it,” he said.
Gasoline prices put pressure on household budgets
Forecasters predict that even if a deal to end the Iran war is reached soon, oil prices will remain high for several months. Other products such as food are also likely to rise in price.
Fears about rising gas prices have already taken a toll on consumer sentiment, which fell to a three-month low in March as Americans expressed concern about the economy, according to a monthly survey from the University of Michigan.
“Gasoline prices are so conspicuous that it’s fundamentally unsettling to drive past a sign every day reminding you that prices are going up,” Tom Barkin, president of the Richmond, Virginia, Federal Reserve Bank, said in a recent speech. “Higher oil prices not only hurt consumer confidence, but also affect the prices of other products such as air travel, cargo and shipping. These price increases can crowd out spending in other areas.”
Rising gas prices are having the greatest impact on those on the tightest budgets, including college students, according to Oracle, the University of South Florida’s student newspaper.
Tyler Dunham, a 22-year-old computer science major, told USA TODAY he had no choice but to walk the 40-mile, hour-long journey from his home in Spring Hill to the university’s main campus in Tampa five times a week.
Dunham is paying for his internship as a software engineer, including the $130 a week it currently costs to fill up the tank of his Hyundai Sante Fe twice a week.
The extra charges of $20 to $40 a pop put a strain on his lifestyle. Door dashing has decreased, and going out has decreased.
“It adds up,” Dunham said. “It’s like paying off your student loans in full.”
It’s a tough time to make a living by driving.
The situation is even worse for people who drive for a living.
Some employers reimburse employees for the use of their cars, and the Internal Revenue Service sets standard mileage rates each year. However, that money is not growing that much now.
Gig workers at ride-hailing and food delivery platforms are receiving temporary incentives such as fuel discounts from companies like Uber and DoorDash.
Irvin Hansen, a 66-year-old Uber driver from Pleasanton, Calif., said that’s not much consolation for drivers who have to pay for gas, maintenance and insurance. If those costs rise, Hansen said, it could take a big hit to revenue.
These days, you’ll pay $5.62 per gallon to pick up a ride in San Francisco, up from $3.89 six weeks ago. To make matters worse, his Honda Accord Hybrid had been broken until recently, so he rented a Kia Sport, which cost him $50 a day in gas alone.
“It was tough,” Hansen said.
Commuters should consider cycling or carpooling
Gartner’s Walsh recommends that employers offer one-time subsidies or bonuses to commuters who are feeling the pinch to cover increased costs and ease financial stress.
Some organizations are temporarily allowing employees to work from home one or two days a week. Mr. Walsh also recommended more flexible work schedules to help employees avoid gas-guzzling traffic jams during peak commute times.
For those with options, more people are considering walking, biking, carpooling, or taking the bus or train for a change of pace.
Boris Kagalitsky, 42, a financial advisor from Cleveland, switched gears a few years ago and hasn’t looked back.
His pedals have been his go-to commuter ever since gas prices soared during the Obama administration. From spring to fall, I bike to work when the weather permits, to save money, cut down on carbon emissions, and sneak in some aerobic exercise.
“I’m doing this primarily for health reasons, but obviously with gas prices being what they are, that’s an added motivation,” Kagaritsky said.
