Issued on: 06.12.2022 – 03:16Modified: 06.12.2022 – 03:14
New York (AFP) – Rising energy costs are being felt across the US economy with mixed effects. Some consumers absorb higher costs while others change their behavior or cut back.
Here is a sampling of how the story plays out in different sectors.
Trucker sees austerity measures
With fuel prices rising, truck driver Lamar Buckwalter sees signs everywhere that consumers are saving.
Demand for refrigerated pet food – a hot business just three months ago – has virtually disappeared. People are also changing their own diets, ordering lower quality meats like veal and crab cakes.
“People are starting to cut off the extras,” said Buckwalter, a third-generation trucker who lives in Pennsylvania. “You’re not buying a filet mignon steak.”
When he last filled up, Buckwalter was spending $5.79 a gallon on diesel, more than double the price from a year ago, a shift exacerbated by lower employment rates as demand for transportation services cools.
Somewhat mitigating is Buckwalter’s membership in a national small truckers’ association that offers discounted fuel. He can also pass on a fraction of the fuel price spike to consumers.
But the pain of refueling is “enough to make a preacher curse,” said Buckwalter, who discourages trips that aren’t adequately paid for.
He also plans to tighten his belt when it comes to perks for his three employees, such as a family picnic in the summer.
“We’ll still pay Christmas bonuses,” he said. “Unfortunately I have to save where I can.”
Hard times for taxis
Also affected is Rutz Alliance, a New York City cab driver who is under pressure on a daily basis.
A New York cab driver told AFP his daily gas purchase went from $25 to $45 Angela Weiss AFP/File
“I used to fill up with $25 gas every day,” Alliance told AFP. “Now it’s up to $45.”
That equates to about $600 to $650 a week, a third less than before the pandemic.
“We’re trying to live. We have no choice. Inflation is over. Rent, food, everything, but it’s take it or leave it.”
The New York Taxi Workers Alliance called the price jump an “emergency” and called for a temporary 75-cent fuel surcharge in March. But the city administration hasn’t done anything yet.
Airlines pass on the pain
Airlines are among the sectors hardest hit by rising energy prices, with jet fuel prices up nearly 50 percent since mid-March, according to Argus.
This would normally be a huge burden on the industry as fuel and labor are two main sources of costs.
“The rule of thumb in this industry is you can go through two-thirds of a fuel price increase in three to six months, the full amount in six to 12 months,” said Savanthi Syth, industry expert at Raymond James.
But in an era dominated by pandemics, airlines are benefiting from “pent-up demand” from consumers looking to travel after more than two years of containment.
Airline tickets are currently up 38 percent from last year’s levels, with industry executives saying they have no trouble passing on the impact of higher fuel costs.
A higher bar on holiday
For Chayzz Devyant, a summer visit to Atlantic City was a victim of rising gas prices.
Some people are changing vacation plans to reflect high gas prices, but airline ticket sales for 2022 are up 38 percent compared to 2021 Stefani Reynolds AFP/File
Driving back and forth to Casino Town alone would cost around $162 in gas, on top of accommodation expenses.
“Big Oil is to blame,” said Devyant, who hopes to work from home to save on fuel bills.
But travel pundits still expect a busy summer, even as more consumers like Devyant cut some trips.
“We’re seeing mixed messages. Oil prices are obviously having an impact,” said Aaron Szyf, economist at the US Travel Association.
“But the pent-up demand is so high that hotels/attractions/national parks/flights are expected to all be at full capacity this summer.”
Electric vehicles under the microscope
Higher gasoline prices have led to greater consumer interest in electric vehicles (EV). EV options website visits are up 73 percent since January, according to Cox Automotive.
However, according to Cox, the proportion of visits from electric vehicles remains relatively small at 5.7 percent of all page views.
Additionally, shortages of semiconductors and other essential consumables have left auto dealerships with limited inventory, hurting sales.
In May, Toyota and Lexus sold 46,000 hybrid vehicles, down 17 percent from the same period last year amid tight supplies.
At Tesla, the top-selling EV maker in the US, the waiting time is at least three months for delivery of a Model 3 and six for the Model Y.
© 2022 AFP
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