That’s how much more U.S. consumers spend whenever the pump price of gasoline, which reached a new seven-year high Monday, is a penny a gallon higher for a year.
The national average gas price inched up 1 cent a gallon over the past few days, rising to $3.20 Monday, the highest since October 2014 and $1.02 more than a year ago, according to AAA. Demand has increased as the economy has reopened following pandemic-related restrictions.
Every $1.18 billion spent on gas reduces the disposable income households have to spend on other items, according to a new report from economists at Deutsche Bank. Assuming pump prices stay near their current levels over the next several months, that extra $1 a gallon at the pump will translate to about $120 billion that can’t be used for other things, they said, adding that less affluent households are likely to feel the pinch the most.
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