When the fuel boost weighs on the economy

Record prices at the pump in the United States are driving up motorist bills, but are also affecting many parts of the economy, straining truckers’ budgets, driving up airline tickets or spurring interest in electric cars.

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They crossed a new threshold on Saturday when the average price of a gallon of gasoline surpassed $5 for the first time.

Lamar Buckwalter, head of a medium-sized road transport company, increased its prices slightly.

But he can’t fully pass on the fuel growth to his customers: he can clearly see from his deliveries that consumers themselves are “starting to forgo small pleasures” like nice cuts of meat, he told the AFP news agency.

At the last fill-up, he spent $5.79 per gallon of diesel, more than double what it was a year ago.

Therefore, the carrier pays more attention to the trips it accepts, even if this means giving up those that pay the least. He also plans to reduce perks for his three employees, such as the usual annual picnic.

The airlines themselves are doing quite well.

“The general saying in the airline industry is that companies manage to pass on around two-thirds of the fuel increase (to customers) in three to six months and 100 percent in six to 12 months,” says Savanthi Syth, specialist in the sector for Raymond James .

But after two years of slow travel due to the pandemic, Americans are willing to pay a heavy price.

American companies, which a few years ago largely stopped buying kerosene in advance to hedge against a sharp rise, were able to almost completely pass on the price increase in a few weeks: Airline ticket prices in May were 38% more expensive than before Year.

Another effect of the pandemic: Staff shortages have prompted some companies like Delta to reduce the number of flights they offer this summer, thereby consuming less fuel.

On Cox Automotive’s dedicated websites, visits to EV pages have increased by 73% and hybrid vehicle pages by 25% since January.

Sales of used electric cars rose 52% in May on used car sales site Carvana.

But with semiconductor shortages and supply chain issues, manufacturers are struggling to meet demand.

At Tesla, by far the number one electric car in the USA, you have to wait at least three months for a Model 3 and six months for a Model Y.

Toyota and Lexus sold 46,000 hybrid vehicles in the United States in May, up from the 58,000 sold in May 2021 due to a lack of inventory.

Chayzz Devyant, 32, had planned to have fun in Atlantic City, a New Jersey resort town known for its casinos. But the trip would have cost him $162 for gas and $114 for a hotel. He preferred to cancel.

“The big tankers are to blame, they abuse the prices,” he says.

From there, what do Americans forego when traveling? Not sure, says Aaron Szyf, economist at the American Travel Association.

“We have conflicting signals,” he told the AFP news agency. “Oil prices are obviously affecting style, distance and travel spending, but demand is so high after two years of setback that hotels, attractions, national parks and flights are expected to be at full capacity this summer,” he adds.

“I used to spend $25 a day on gas, now it’s $45,” laments Rultz Alliance, a 69-year-old New York City cab driver.

Result: Instead of making $800-850 net per week before the pandemic, he now only brings in $600-650.

But “we have no choice,” he told AFP while waiting for customers at La Guardia Airport. “Inflation affects everything. Rent, groceries, you have to deal with that.”

Even with a hybrid car, the situation remains complicated: one driver, who declined to give his name, explains that he pays $30 a day for gas, up from 12 before the pandemic.

“It’s no longer worth driving,” he says, pointing to the almost empty parking lot where the taxis are crowded. But at 60 he still has to find an alternative.

As fares for yellow cabs in New York have not increased since 2012, a union called for a temporary fuel surcharge of 75 cents per ride in March. So far he has not been successful.

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