When increased fuel weighs on the economy

When increased fuel weighs on the economy

Record prices at U.S. gas stations inflate motorists’ bills, but they also have repercussions in many parts of the economy, stretching truckers’ budgets, increasing airline tickets or reviving interest in electric cars.

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They crossed a new threshold on Saturday, with the average price of a gallon of gasoline crossing $5 for the first time.

Lamar Buckwalter, head of a trucking SME, raised his prices slightly.

But he can’t entirely pass on the fuel increase to his customers: he sees clearly in his deliveries that consumers themselves “are starting to give up small pleasures” like beautiful pieces of meat, he told AFP.

The last time he filled up, he spent $5.79 for each gallon of diesel (3.78 liters), more than double what he did a year ago.

Therefore, the carrier pays more attention to the trips it accepts, even if it means giving up those that pay less. He also plans to cut benefits for his three employees, such as the usual annual picnic.

The airlines themselves are doing quite well.

“It is often said in the aviation industry that companies manage to pass on (to customers) about two-thirds of the increase in kerosene in three to six months, and 100% in six to twelve months,” says Savanthi Syth, specialist in the sector for Raymond James.

But after two years of slow travel due to the pandemic, Americans are willing to pay a heavy price.

American companies, which for the most part stopped buying kerosene in advance several years ago to protect themselves in the event of a sharp rise, managed to pass through almost all of the price rise in a few weeks: airline ticket prices in May they were 38% more expensive than a year ago.

Another effect of the pandemic: the lack of personnel has led some companies like Delta to reduce the number of flights offered this summer, and thus consume less fuel.

On specialized Cox Automotive sites, the number of visits to pages dedicated to electric vehicles has increased 73% since January, 25% for hybrids.

Sales of used electric cars soared 52% in May on used vehicle sales site Carvana.

But between semiconductor shortages and supply chain problems, manufacturers are struggling to meet demand.

At Tesla, by far America’s number one electric car, you have to wait at least three months for a Model 3, six months for a Model Y.

Toyota and Lexus sold 46,000 hybrid vehicles in the United States in May, up from 58,000 sold in May 2021 due to inventory shortages.

Chayzz Devyant, 32, had planned to party in Atlantic City, a New Jersey resort town known for its casinos. But the trip would have cost him $162 in gas and $114 in a hotel. He preferred to cancel.

“The big oil tankers are to blame, they abuse prices,” he says.

From there to the Americans stop traveling? I’m not sure, says Aaron Szyf, an economist at the American Travel Association.

“We have mixed signals,” he told AFP. “Oil prices obviously have an effect on type, distance, travel spending, but demand is so high after two years of decline that hotels, attractions, national parks and flights are expected to be at full capacity this summer,” he adds. .

“I used to spend $25 on gas a day, now it’s $45,” laments Rultz Alliance, a 69-year-old New York taxi driver.

Result: Instead of making $800-850 net per week before the pandemic, now he only makes $600-650.

But “we don’t have a choice,” he told AFP as he waited for clients at LaGuardia airport. “Inflation affects everything. Rent, food, you have to deal with that.”

Even with a hybrid car, the situation remains complicated: A driver who did not want to give his name explains that he pays $30 for gas a day, compared to $12 before the pandemic.

“It’s not worth driving anymore,” he says, pointing to the nearly empty parking lot where taxis congregate. But at 60, he has yet to find an alternative.

Since New York’s yellow cab fares have not increased since 2012, a union in March demanded a temporary fuel surcharge of 75 cents per trip. It has not been successful so far.

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