That’s how much more American households could spend on gas this year because of soaring prices at the pump, according to one analysis.
The estimate from economists at U.K.-based Oxford Economics assumes the price of U.S. gas will average $4.85 per gallon in 2022, but even if gas averages $4.40 a gallon, that would still mean a hefty hit to households, an extra $1,500, they said. Gas has already spiked, rising about 71 cents to a record $4.32 in the first 10 days of March, and it’s expected to go up even more.
Gas prices that were already on the rise jumped dramatically after Russia—the world’s third-largest petroleum producer—invaded Ukraine, prompting the U.S. to stop importing oil (which is used to make gasoline) from Russia. Households are reeling from sticker shock in all corners of their budget, with the overall inflation rate in February reaching 7.9%, the highest since 1982.
“At a time when consumers are feeling the effects of the hottest inflation in four decades, the Russia-Ukraine war has added more fuel to the fire,” Lydia Boussour, lead U.S. economist at Oxford, wrote in a recent commentary.
With more dollars going toward gas budgets, economists expect fallout from the war to hurt overall consumer spending in the U.S., in turn hurting economic growth this year. Depending on the price, the higher gas costs could shave the growth rate for gross domestic product by 0.6 to 1.3 percentage points, Oxford said. (The lower end assumes gas averages $3.95 this year; the higher end, $4.85.) Dana Peterson, chief economist for The Conference Board, put the impact at between 0.3 and 0.8 percentage points.
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