Gas prices which have recently approached historic highs are affecting consumers in many areas that are not immediately obvious, according to analysis from the transportation management software team at Software Advice. For example, for every $10 increase in crude oil price, gas prices rise $0.25 and remove $25 billion from the US economy, according to this article.
Gas Prices Affect Freight, Transportation, Income
Software Advice analysis shows that rising gas prices also affect costs in areas such as freight and transportation. In 2010, the cost of transporting a load of tables and trade show displays from Orlando, FL to Seattle, WA averaged $1,600. This year, it averages $2,100, an increase of about 31%.
Similarly, the cost of a taxi cab in San Francisco was $0.45 per minute in 2010, but is now $0.55, a 22% hike. This is the first increase in San Francisco cab fare in eight years. Furthermore, although consumer income rose 0.3% in February 2011, higher gas prices helped drive a 0.7% increase in consumer spending, resulting in a net 0.1% loss in disposable income (adjusted for inflation).
Gas Price Impact Trickles Down to Commodities
Software Advice research indicates rising prices of crude oil and gas also trickle down to affect the prices of many commodities. In the past year, crude oil prices have risen 14% and diesel gasoline prices have risen 19%. Meanwhile, the average price of cotton has risen 131%, rubber has risen 73%, corn has risen 58%, beef has risen 39%, and wheat has risen 37%. Single-digit percent increases have also been observed in the average prices of aluminum and plywood.
More expensive raw materials have resulted in a year-over-year increase in the average price of a month’s worth of groceries of a family of four from $953.20 to $974.20, or 2%.
Gas Prices Approach Record Levels
Adjusted for inflation, even the oil crisis of 1979 only brought gas prices to about $3.50 per gallon. That’s 12.5% less than the $4 per gallon range the US is approaching. In the past two years, gas prices have nearly doubled in the US, and crude oil is now regularly topping $100 a barrel.
US Prices Still Cheap on Global Scale
Taking a look at some global gas prices, other consumers across the world are paying much more for gas–mainly due to higher taxes. Greek consumers are paying the highest average price per gallon of any country analyzed by Software Advice – $9.19, about 2.3 times more than US consumers pay. Conversely, consumers in the oil-producing U.A.E. pay an average of $1.40 per gallon, a little more than one-third of what US consumers pay.
Nielsen: Consumer Response to Gas Prices Less Severe than ’08
In spring 2011, US consumers have adjusted to a new spending reality as a result of high gas prices, but actions taken to cut down on spending habits, such as eating out less, buying less expensive grocery brands and doing more things at home are less prevalent compared to the summer of 2008, according to data collected by The Nielsen Company.