SAFE’s analysis of the latest data from the Bureau of Labor Statistics finds that despite record domestic oil production, U.S. consumer spending on gasoline remained near all-time highs last year.
Recent data from the Consumer Expenditure Survey (CES) from the Bureau of Labor and Statistics (BLS) indicates that the average U.S. household spent more than $2,600 on gasoline in 2013 for the third consecutive year — a 111 percent increase from the $1,235 spent in 2002. Moreover, gasoline spending increased by an average of 8 percent annually over the past decade, while non-gasoline discretionary spending increased by an average of 1 percent annually.
Closely correlating with global crude oil prices, not domestic crude streams, increased U.S. gasoline spending proves a result of stubbornly high global oil prices and American consumers’ near-complete reliance on oil as a transportation fuel. Despite a retreat from historical highs in 2013, Brent crude oil prices remained elevated, averaging $108 per barrel, and as a result, U.S. gasoline prices declined little in 2013 from 2012.
Key findings from the report include:
- The average American household spent more than $2,600 on gasoline last year, in line with data for 2011 and 2012, representing an increase of 111 percent from 2002 levels.
- Spending on gasoline increased by an average of 8 percent annually over the past decade, while (non-gasoline) discretionary spending increased by an average of just 1 percent annually.
- The burden of higher fuel prices was felt most strongly by lower income households. The lowest quintile spent almost 13 percent of pre-tax income on gasoline, compared to just 2.5 percent for the highest quintile. Geographically, gasoline spending was highest in rural Midwestern states and lowest in more densely populated states along the coasts.
- BLS data suggests that, while the U.S. oil boom has generated sizeable macroeconomic benefits, including a reduced trade deficit, higher overall domestic investment, and job growth in extractive industries, consumers have yet to benefit in any sustained way at the pump. U.S. gasoline prices most closely correlate with global crude streams, leaving consumers directly exposed to events in the global oil market.
- Advancements in alternative fuel vehicles provide reason to be optimistic that spending on transportation fuels will decline in the future. The price of electric vehicles (EVs) is falling and attributes like range and recharging time continue to improve. In the sub-compact segment, EVs will reach cost parity with conventional internal combustion engine vehicles by 2016.