Gas prices have been steadily rising for months, a trend doesn’t look like it will end any time soon. The increasing prices are a top concern for U.S. consumers, who have seen their recent pay increases diminished every time they pay at the pump.

As of March 21, 2022, the average price per gallon for regular gas in the United States is $4.252, up from $2.882 a year prior. Certain states, particularly on the West Coast, are seeing even higher gas prices. In California, for example, the average price for a gallon of gas is $5.855. And the increase in gas prices is having a ripple effect, pushing up the prices of things like plastic and fertilizer, which are made with petroleum or natural gas. 

Spending more on gas could mean you have less money to spend on essentials, or put towards your savings. But there are some ways you can plan and budget for this bigger expense. 

Why are gas prices rising?

Most immediately, Russia’s invasion of Ukraine has caused gas prices to spike, and is likely to keep them inching upwards. President Biden banned imports of oil, gas, and coal from Russia in mid-March. Although Russia is one of the world’s biggest oil and gas producers, its products account for only 4% of U.S. imports. The ban has still sent oil prices higher because of a ripple effect the restrictions are having on other parts of the oil import pipeline, particularly as more oil extractors pull out of Russia.

Another reason for higher gas prices is higher demand from consumers. Initially at the start of the pandemic in 2020, as people spent more time at home, oil prices reached record lows and the Organization of the Petroleum Exporting Countries (OPEC) and its allies reduced oil production to maintain prices. But as consumers have hit the road again, and demand has returned, OPEC has been slow to increase production, further driving prices up. U.S. oil manufacturers could also be slowing production, over concerns of possible new environmental regulations. 

And increasing prices at the pump are having an impact on inflation, which is at its highest level since the 1980s. The Consumer Price Index (CPI), a cost of living index that measures the value of goods and services consumed by people in the U.S., has been steadily on the rise in recent months, peaking at 7.9% in February 2022, according to the Bureau of Labor Statistics (BLS). The index measures the monthly percentage change in prices paid by urban consumers on goods and services. While the price of gas makes up only 6% of the index, it has risen 6.6% month-over-month, and 38% year-over-year. 

An international response

The Biden administration has said that it will take some steps to try to stem price hikes. Foremost, the U.S. and other wealthy nations will release 60 million barrels of oil from strategic reserves, coordinated through the International Energy Agency. Of that amount, the U.S. will release 30 million barrels from the U.S. Strategic Petroleum reserve. This is only the fourth time since the 1970s that the agency has overseen a coordinated release to fight high oil prices. Biden reportedly may try to seek oil from countries such as Venezuela, Iran, and Saudi Arabia, although that move risks some political fallout, as these are nations with sometimes problematic relationships to the U.S..

Here’s what you as a consumer can do to budget for increasing gas prices.

Plan where to get gas

Consumers don’t really shop around for gas. Instead they tend to have loyalty to specific stations. One way to control your gas costs is to plan when and where you’re going to fill up. If you’re the type of person to wait until you’re running on empty to get gas, you may want to rethink that approach. If you know when you’re going to need gas, you can plan ahead so you don’t have to fill up at the nearest gas station, which could be more expensive than another location.

Find a gas station with affordable prices, by driving around or searching online. Consider downloading a gas-price app to find the most affordable gas providers on your route, recommends Robert Walden, editor-in-chief of Seattle, Washington-based car maintenance blog VehicleFreak.com. Apps like GasBuddy, Gas Search, and Gas Guru can all be helpful. Some map apps like Waze and Google Maps can also come in handy.  

Planning when you get gas is also important. Walden recommends heading to the pump at the beginning or end of the work week. “Gas is usually cheapest on a Monday or a Friday, given that there is more demand for gas during the work week,” says Walden. He also suggests filling up at night since “gas demand is lower during the nighttime hours, so prices could be reduced.”

Use a rewards card

Be mindful of how you pay for your gas. If you use a credit card, take a look at your card’s benefits to see if you get a certain amount of points or rewards for using your card at a certain type of station. You might get a few percentage points of your gas expenses back if you use that card. You can also sign up for a card from gas chains like Speedway or Mobil, Walden says. If you’d rather use a debit card, remember that you can earn rewards in the form of stock with Stash’s Stock-Back® Card.¹

Discount and wholesale stores also sometimes offer better prices, so you might want to invest in a membership. “A wholesaler such as Costco can afford to invest in vast quantities of gasoline,” says Ian Lang, senior car advice editor at Bumper.com, based in New York, New York. “Despite the increased gas prices, Costco continues to benefit from bulk purchases.” You can get a membership to Costco, BJ’s, or Sam’s Club for prices ranging from $45 to $120 per year. 

Consider asking for a stipend

Your employer might offer certain benefits for using your car to get to and from work. If you haven’t taken advantage of those benefits yet, it might be a good time to explore them. Particularly in the age of Covid-19, some employers are offering stipends for commutes, travel, cellphones, home offices, and more. Check your employee agreement or with your human resources department to find out. And if you don’t receive a stipend, think about approaching your manager to ask for one. 

You might also be eligible for a tax break if you use your car for work, or are self-employed. The Internal Revenue Service (IRS) allows you to deduct some of the money you spend on gas if you work for a company that requires you to use your car, or if you have your own business and drive for work. For the year 2022, workers who use their car for business can deduct 58.5 cents per mile. Taxpayers can claim a mileage deduction with the Schedule C tax form. 

Gig workers who drive for companies such as Uber, Lyft, and DoorDash are considered contract workers, and must typically pay for their own gas. In response to rising fuel prices, some ride-hailing companies offer drivers rewards cards that can help offset the cost of gas, while others reportedly have raised prices to compensate for higher gas prices. 

Note: Stash does not offer tax advice. Consult a tax professional for advice about your tax situation.

Ask for an inflation-based raise

In addition to a gas stipend, you might think about asking for an inflation-based raise, if you think it’s feasible. Most employers offer 3% to 5% when they give workers a raise, according to Indeed. But that percentage is well below the current inflation rate. So take that into consideration if you’re ready to ask for a pay bump. 

Another thing to keep in mind when you ask for a stipend or a pay increase is the current job market. A record number of people have quit their jobs in recent months. In November 2021, 4.5 million people quit their jobs, while the number of job openings stayed roughly the same, according to the Bureau of Labor Statistics. Because of this “Great Resignation,” workers may have more leverage than usual when asking for what they want. 

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The energy sector makes it possible for you to drive your car, turn on your air conditioner, and so much more.

This sector includes companies that generate power, from sources as varied as petroleum, natural gas, coal, renewable fuels, and electricity from wind, solar, hydropower, geothermal, and nuclear power. Providing power to factories, businesses, cars, trucks, planes, trains, homes, and more, the energy sector is critical to the functioning of every sector of the economy. 

The companies in this industry, which have a combined market value of approximately $700 billion, harvest natural resources, through oil drilling, coal mining, wind farms and hydroelectric plants. They’re then responsible for turning natural resources into energy, which can be used by consumers and companies alike.

Some of the most profitable companies in the world—including Exxon, Chevron, China National Petroleum, Royal Dutch Shell, Saudi Aramco, and more—are part of the energy sector. Still, these companies are also linked to the worsening climate crisis. The burning of fossil fuels such as coal and oil has caused the earth’s temperature to increase over time, intensifying natural disasters like hurricanes and droughts. But as energy companies grapple with their role in the changing climate, the sector has become an area of innovation in renewable energy sources like wind, solar, and hydro power.

Know your Btus

When you think about energy, it’s helpful to know how it’s measured. Energy is commonly measured in something called British thermal units (Btu). (Another method is called the kilowatt-hour.) Energy is bought and sold according to these units. A Btu is the quantity of heat required to raise the temperature of one pound of liquid water by 1℉ at the temperature that water has its greatest density, according to the U.S. Energy Information Association. In 2020 alone, the U.S. consumed 92.94 quadrillion Btu of energy. The industrial sector, which is made up of agriculture, manufacturing, mining, and construction businesses uses the most energy, 33% of the total consumption. This sector is followed by transportation (26%), residential use (22%), and commercial use (18%). 

The most-consumed source of energy is petroleum, making up 32.23 quadrillion Btu. Petroleum is followed by natural gas (31.54 quadrillion Btu), renewables (11.59 quadrillion Btu), coal (9.18 quadrillion Btu), and nuclear (8.25 quadrillion Btu). 

In 2018, the U.S. spent $1.3 trillion on energy, in transportation, residential, commercial, and industrial uses. The energy sector reportedly contributes to 6.2% of the Gross Domestic Product (GDP) of the U.S. As of 2019, the energy sector employs 6.7 million people in the U.S, accounting for 4.6% of American employment. Employees in this sector work in electric power generation and fuel, transmission distribution and storage, energy efficiency, and motor vehicles. 

Here are some of the biggest companies in the U.S. energy sector, by energy source: 

Oil and natural gas companies, by market capitalization: 

• Exxon Mobil Corporation, based in Texas, has a market cap of $145.2 billion. 
• California-based Chevron Corporation has a market cap of $134.4 billion.
• ConocoPhillips, also based in Texas, has a market cap of $35.2 billion. 

Coal mining companies, by production: 

• Based in Missouri, Peabody Energy Corporation produces 138.7 million short tons per year.
• Also based in Missouri, Arch Coal Inc. mines 87.9 million short tons of coal annually.
• Navajo Nation, which is based in New Mexico, puts out 47.1 million short tons of coal each year.

Nuclear energy plants by output: 

• Palo Verde Generating Station in Arizona, which generates 3.93 Gigawatts of energy.
• Based in Alabama, the Browns Ferry Nuclear Plant puts out 3.4 Gigawatts of energy.
• Peach Bottom Atomic Power Station, based in Pennsylvania, generates 2.77 Gigawatts.

Renewable energy, by market cap: 

• NextEra Energy in Florida, with a market cap of $147.8 billion.
• Based in Arizona, First Solar has a market cap of $8.6 billion.
• Renewable Energy Group is based in Iowa, with a market cap of $2.9 billion.

The progression toward renewable energy

Climate change, or the warming of the planet over time because of greenhouse gas emissions from fossil fuels, has led to an increased emphasis on renewable energy. The summer of 2021 has seen record temperatures in the U.S., with places like the Pacific Northwest and the Southwest experiencing severe heat waves. Currently, the planet is on track to get hotter by 7℉ by 2100. The Paris Agreement, which is an international treaty made in 2015 between 196 parties, aims to limit global warming to less than 2℃ by 2050. 

2020 was the biggest year for renewable energy consumption to date, with renewable energy sources accounting for 12% of the energy consumption in the U.S., or 11.59 quadrillion BTU. From the late 19th century onward, the biggest sources of energy have been nonrenewable fossil fuels such as coal, natural gas, and petroleum. 

And until the 1990s, the most common sources of renewable energy were hydropower and wood. In recent years, the focus has shifted to other sources of energy such as biofuels, geothermal energy, solar energy, and wind energy. 

Investing in the energy sector

While the energy industry is changing, energy is always necessary to power industries, homes, and the economy. If you want to invest in the sector, you can do so with Stash by investing in shares or fractional shares of companies that produce and provide energy from nonrenewable sources such as oil and gas, or renewable sources like wind, water, and solar power.¹ 

Keep in mind that while energy is vital to the economy, the sector can also be volatile, depending on supply and demand of the commodities that power the sector, such as oil and gas. For example, when the Covid-19 pandemic reduced demand for oil and gas, the S&P 500’s Energy sector dropped 36.2% while the overall S&P 500, which fell about 7%. 

The best way to combat volatility in investing is by following the Stash Way®, which recommends investing small amounts of money regularly in a diversified portfolio. One way to diversify your portfolio is by investing across different sectors such as technology, materials, and utilities. Doing this can help balance your portfolio and protect you from taking on too much risk.

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