Spike in fuel prices puts a strain on the US economy

Skyrocketing energy costs are being felt in the US economy with mixed effects. Some consumers are assuming the high prices, while others are changing their habits or tightening their belts.

Here are some examples of how the landscape is playing out differently for different sectors.

Truckers see austerity

While dealing with rising fuel prices, trucker Lamar Buckwalter sees signs all around him that consumers are cutting corners.

Demand for refrigerated pet food, a boom business three months ago, has virtually disappeared. Consumers are also changing their own diets, ordering fewer high-quality meats like beef and crab.

"People are starting to cut back on extra (expenses)"says Buckwalter, the son and grandson of truckers who lives in Pennsylvania. "They’re not buying filet mignon".

The last time he filled up, Buckwalter spent $5.79 a gallon on diesel, more than double the price of a year ago, a change exacerbated by low employment rates as demand for trucking services cools.

To mitigate the situation a bit, Buckwalter is a member of a small truckers’ association that offers discounts on fuel.

However, the painful rise in prices "enough to make a believer curse"says Buckwalter, who has had to turn down some trips because it didn’t pay off.

He also plans to tighten his belt with the benefits he offers his three employees, like the family summer picnic.

"We still give Christmas bonuses"He says. "Unfortunately, I have to cut where I can".

Hard times for taxis

The impact is also felt by Rutz Alliance, a New York taxi driver whose pocket is touched daily.

"I used to put 25 bucks worth of gas every day"Alliance told AFP. "Now they are over 45".

"We are trying to live. I do not have a choice. Inflation is everywhere. Rent, food, everything, but it’s ‘take it or leave it’".

In March, the New York Taxi Drivers Alliance called the skyrocketing price a "emergency" and requested a temporary surcharge of 75 cents. However, officials have failed to take action.

Airlines dodge the blow

Airlines have been among the sectors most directly affected by spikes in energy prices, with jet fuel climbing nearly 50% since mid-March, according to Argus.

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Such a scenario would normally lead to a huge slippage for the industry, since fuel and labor are two huge sources of costs.

"The rule in this industry is that you can go through a two-thirds increase in fuel prices in 3-6 months and a full increase in 6-12 months."says Savanthi Syth, industry expert at Raymond James.

But airlines are benefiting from the "repressed demand" of consumers who want to travel after spending more than two years confined by the covid-19 pandemic.

Airfares are now up 38% from a year ago, as industry executives say they are having little trouble avoiding the impact of more expensive fuel.

Repressed demand saves tourism

For Chayzz Devyant, gas prices have kept her from the usual summer visit to Atlantic City.

Just getting to and from casino town can cost around $162 in gas, not counting lodging expenses.

"Blame it on the big oil companies."says Devyant, who hopes to work from home to save fuel money.

However, travel experts still expect a busy summer even if consumers like Devyant cut back on commuting.

"We see found messages. Oil prices obviously have an effect"predicts Aaron SzyF, an economist at the American Travel Association.

"Yet pent-up demand is so high that hotels, attractions, national parks and flights are expected to be at full capacity this summer.".

Electric vehicles more attractive

Higher gasoline prices have sparked increased consumer interest in electric vehicles. Since January, visits to websites featuring these cars have increased 73%, according to Cox Automotive.

In any case, visits for electric vehicles represent a relatively small 5.7% of the total, according to Cox.

In addition, shortages of semiconductors and other key components have left car dealers with limited inventories, strangling sales.

In May, Toyota and Lexus sold 46,000 hybrid vehicles, down 17% from the same period last year amid tight supplies.

With Tesla, the leading manufacturer of electric sales in the United States, the lead time is at least three months for the shipment of the Model 3 and six months for the Model Y.

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