If Gas Reaches $6 a Gallon, It Will Eat Up Almost 30% of Low Earners' Income
- Some experts predict that gas will average over $6 a gallon this summer.
- If that happens, lower earners might really struggle to make ends meet.
Talk about an astounding blow.
For weeks on end, U.S. drivers have been paying up at the pump as gas prices have soared. But while gas is extremely expensive right now, it could grow even more expensive in the coming weeks.
In fact, last month, a J.P. Morgan analyst predicted that the average cost of a gallon of gas could reach $6.20 this summer. That would represent a 31% increase from the average price of $4.73 drivers paid the week ending May 30.
Not surprisingly, it's lower earners who stand to get hurt the most if gas prices reach $6 a gallon or more. In fact, new research from Jerry reveals that if gas hits $6 a gallon, households earning less than $40,000 a year will end up spending up to 28% of their post-tax income just to fuel their vehicles. By contrast, households earning more than $150,000 will spend up to 4.9% of their income on gas should its cost rise to $6 a gallon.
A major problem
Rising gas costs are a problem for many consumers, and unfortunately, the age-old advice of "drive less" doesn't work for everyone. Sure, some people may have the option of carpooling to work or taking turns with other parents getting their children to school. But driving less doesn't work for people who can't find a carpool and aren't allowed to work remotely.
What's more, some people can cut back on driving by doing errands on foot instead. But in rural areas, that may not be possible. It's one thing to walk 10 blocks to the nearest grocery store and lug home a heavy bag of food. But if the closest supermarket is 10 miles away, that's clearly out of the question.
How to save money as gas prices soar
Cutting back on driving clearly isn't possible for everyone. But there are steps consumers can take to pay less at the pump.
For one thing, they can use apps like GasBuddy to research gas prices ahead of time and see where local fuel is the cheapest. However, once again, that may not work for those in rural areas where the difference between the closest gas station and the next closest gas station is 12 miles.
One thing drivers can do regardless of location, however, is try to find a credit card with generous rewards for fill-ups. Snagging a card paying 3% or 4% cash back at the pump could help ease the pain of rising fuel costs.
That said, using a credit card at the pump isn't always the best idea. That's because some gas stations offer a sizable discount to drivers who use cash to fill up. In fact, it's common to see a price difference of $0.10 a gallon between cash fill-ups and those paid for by credit card.
Either way, though, these tricks won't do all that much to ease the burden on lower earners. Sure, saving a few dollars on gas is helpful in its own right. But if gas prices rise to the point where a large number of people end up spending close to 30% of their wages on fuel, it could create a major debt crisis. That's something lawmakers will hopefully at least attempt to address if gas prices end up rising to an extreme degree in the coming weeks.
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