Years of low U.S. consumer energy costs wane following Russian invasion
Reuters
Published Mar 09, 2022 03:09PM ET
By Stephanie Kelly
NEW YORK (Reuters) - U.S. motorists, already dealing with a steep rise in spending on fuel as the economy rebounded from the coronavirus-induced recession, are now dealing with surging gasoline prices after Russia's invasion of Ukraine.
However, coming into recent months, U.S. consumer spending on energy and gasoline had been near historically low levels - even in the years preceding the coronavirus pandemic.
Global energy market prices have skyrocketed since the invasion and subsequent sanctions on Russia from the United States and other countries. U.S. gasoline prices hit an all-time high while global oil prices surged to 14-year-highs.
Americans allocated a record-low share of 1.3% of their total spending on gasoline and energy goods during lockdowns imposed by governments during the coronavirus pandemic in April 2020, according to the Bureau of Economic Analysis.
Since then, consumer spending on gasoline and energy has taken up a greater portion of total spending. By December 2021, consumers spent about 2.6% of their total spending on gasoline and energy goods, the most since 2015, according to BEA data. That number dropped to 2.5% in January, the most recent figure available - but is expected to keep rising.
The increase in spending on fuel has been steep - the share of spending on gasoline and energy goods rose by nearly 0.9 percentage points from December 2020 to 2021, the largest yearly increase for that month since December 2008 to 2009.
"When prices go up, especially when they go up very fast as they have, people look for somebody to blame and I think it drives consumer sentiment much lower than an increase in your cable bill or an increase in food," said Tom Kloza, global head of energy analysis for OPIS.
Still, consumers spend relatively less on gasoline and energy than they have in the past. In July 2008 during the financial crisis, consumers spent 4.5% of their total spending on gasoline and energy goods and in March 1980 after the 1979 oil shock, they spent a 6.3% share, a record.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.