Gas Prices Near $4 a Gallon as Consumers Start Cutting Back

Prices Near $4 a Gallon

Average U.S. gasoline prices reached $3.98 per gallon on Tuesday, according to AAA, approaching a level last seen when Russia invaded Ukraine in 2022.

Over the past month, gas prices have recorded the second-largest spike in three decades, with average prices climbing more than 30 percent since the war in Iran effectively shuttered the Strait of Hormuz, a narrow waterway that carries up to a fifth of the world’s oil.

The rise is already straining household budgets. While there is no fixed rule for how consumers respond at $4, $5 or $6 per gallon, a 2022 AAA survey found that more than half of Americans said they would change their driving behavior at $4 per gallon. More recent data has also shown that Americans are delaying some forms of spending.

How Consumers Are Responding

Americans are already looking for ways to cut back. In New Orleans, drivers have been lining up at stations with the best prices. Public figures have also urged consumers to reduce discretionary trips, while Georgia has adopted a fuel tax holiday that waives a 33-cent-per-gallon tax.

The effects of the energy shock have been especially severe in Asia. The Philippines declared a state of emergency on Tuesday, and President Ferdinand Marcos Jr. said grounding planes because of a jet fuel shortage was a “distinct possibility.” In South Korea, officials are urging citizens to ride bicycles instead of driving.

Broader Stakes

Transportation is the largest source of planet-warming greenhouse gas emissions in the United States and a major contributor globally. That means a prolonged period of elevated gasoline prices could have broad effects on how willing consumers are to drive gas-powered vehicles, both in the United States and abroad.

For now, the immediate reality is higher fuel costs and a growing search for ways to adapt, from shopping around for cheaper gas to cutting back on driving and other spending.