Soaring fuel prices have disrupted the economy

Unless you’ve been trapped in your house for the past 12 months, you’re probably afraid to travel to your next gas station. The average price of an 87-octane gallon reached $ 3.40 in the United States. This is about 50% steeper than in the beginning of 2021 and is arguably more than we would like to see today. I can’t ignore the dizzying rates advertised outside the UK’s “oil parlors” and many of France’s “brothels”. Canadians are also forced to withstand rising gasoline prices as the government tends to build up taxes a bit higher and the US dollar tends to be more valuable. At least for now.

All you need to know for the purposes of this article is that fuel prices are rising, which is impacting the economy in a fairly dramatic way.

Let’s start with the obvious. When gas prices are low, humans tend to run around a given area more regularly. But the opposite is true when the driver sneaks up to the point where he begins to guess which trip to take due to a new dislike of being full. This means less travel to local grocery stores, refraining from vacations, opting out of other purchases, and even making sure your refueling budget is solid enough to work every day. .. Gallup polls consistently show that consumer confidence in the economy can be inversely correlated with the average price of gasoline.

This hurt retailers who have fewer people visiting local shopping centers or logging on to their websites. Higher gasoline prices also mean higher shipping charges, and the difference is often passed on to consumers. This is especially true for products coming from abroad, as you have to cross thousands of miles before you reach your final destination. The value of the ticket will also increase. This is because fuel prices tend to account for the majority of industry overheads.

Then I have a job. While there are protests against entry-level positions in the United States (such as the food service industry and retail industry), rising gasoline prices usually begin to limit employment the longer they continue to work. This is beginning to appear in the gig economy, especially as it relates to the ride and delivery services offered by Lyft and Uber.

according to Financial TimesDrivers and analysts covering this sector are reporting changes in payment algorithms to account for a 59% increase in fuel costs over the past year. Not only in North America, customers are being billed more, contractors are less profitable, and they are being encouraged to reduce their weekly hours.

“It seems that the driver does not drive much,” he said. Ride share guy, Told the outlet. “There is no doubt that the change in driver behavior due to fuel prices has exacerbated the driver shortage,” she said. Uber and Lyft find themselves on a regular basis.

from FT:

Gasoline prices posted at corner stations are one of the most visible indicators of accelerating inflation in the United States. The oil market recession over the past week could lower retail gasoline prices, but so far, drivers have little reassurance.

And the reason the oil market has reversed (concerns that variants of the Omicron coronavirus can limit mobility) is rarely to support drivers with ride-haling apps.

To cover the extra fuel costs, many gig drivers are adapting to changes such as rejecting more customers far away. Others are quitting.

“Some drivers are reducing the amount of time they do. Some drivers went looking for other jobs,” said Beth Griffith, a former Uber and Lyft driver who heads the Boston Independent Driver Guild. I did.

An online poll conducted by The Rideshare Guy this week found that 91% of rideshare drivers are worried about gasoline prices and about half of them have low driving rates. 12% said they stopped driving altogether as a result of the high price.

Uber’s solution was to encourage drivers to switch to electric vehicles that don’t rely on pump gas. However, EVs are often tagged with high prices that drivers can’t buy (even with significant tax credits) and are suitable for urban environments where range is unlikely to be an issue. To solve the first problem, Uber chose to buy 50,000 Tesla cars as part of its rental scheme. However, it charges employees an astonishing $ 344 a week to use them, and the entire plan seems to be designed to take advantage of drivers at the moment of their despair.

When vehicle operators pay an average of $ 3.40 for regular lead-free (up from $ 2.27 this time last year, according to GasBuddy data), regular Americans have to make increasingly difficult decisions about how to allocate money as inflation. Must (refueling issues) further complicates financial issues.

Politicians don’t seem to fair so well.

World leaders, including Joe Biden, are calling on the Organization of Petroleum Exporting Countries (OPEC) to increase production. However, little progress has been made since the current situation has given political influence to these countries, and the Biden administration is desperate to work with China and countless other gas-bombing nations to ease public finances. Pressure encouraging the use of strategic petroleum reserves in the attempt. This time it must be said that it is 2020, but the United States did not depend on energy and did not depend on foreign oil at all. Perhaps with a healthier energy policy, it could be true again.

So far, West Texas Intermediate crude has increased by about 45% this year as well. This happens to be great if you sell it. However, local oil producers are under pressure from investors to limit production to maximize profitability. Environmental activities, on the other hand, have begun to pursue energies that are not considered taboos for renewable energies. This has made it more socially acceptable and financially wise to raise prices rather than increase energy concerns.

Don’t you believe us? You may want to take a quick look at the stock market. Energy is called the best performing sector of the S & P 500 in 2021.

[Image: Michael Vi/Shutterstock]

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Soaring fuel prices have disrupted the economy

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