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 data show 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 he touted electric vehicles as a solution to high gas prices.

This ignores the high costs and practical problems of electric vehicles. And despite decades of subsidies, according to Department of Energy data, 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 extreme wish to see the demise of gas-powered vehicles, 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 a greater share of their after-tax income on 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 also evidence indicating that rural households 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 spent 20% 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 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.

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 approximately 72% of U.S. goods (based on value) or, according to 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 goods ranging from 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 about 92% of motor carriers operating a fleet of six or fewer trucks, and approximately 97% operating a fleet of 20 or fewer trucks.

As truckers have indicated, high diesel prices could significantly reduce their mileage or hours, and in some circumstances, potentially lead them to stop driving altogether. As it is, the American Trucking Associations argued that in 2021, the trucking industry was already short around 80,000 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.