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Inflation’s Impact on Car Ownership Costs

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The average American does not remember a time when inflation was high. Prices have not increased as quickly as they are now since the early 1980s. While the world has changed significantly in the past 40 years, there are a few similarities to the inflation woes of then and now. A notable one is the prominence of gas prices.

To most people, the price at the pump has become a ubiquitous symbol of price levels rising. In March 2022, the average cost of a gallon of gas was $4.29. Gas prices above $4 are rare enough in most parts of the country, but this climb was made even more dramatic by the fact that just 2 years prior, gas was 40% cheaper. Some may remember March 2020 to be the beginning of pandemic lockdowns that drove gas prices down, but consumer expectations are based on recent memory, not long term trends. 

What’s causing gas prices to creep so high? Travel restrictions mostly disappeared by March 2022, leading to spikes in demand. Furthermore, the conflict in Ukraine has led to embargos on Russian oil, curtailing the global supply. Now, it costs $51.87 to fill up the average car. Truck owners fare worse, spending $99.75 to fill their larger, diesel tanks.

As much attention as gas prices have been getting, they aren’t the only things making car ownership more expensive. Car insurance premiums in the United States have risen to 15%, up from 5%. That’s a premium of $1,655 per year, or $138 per month. America’s largest insurers of automobiles are also filing for rate increases in 2022. When asked why they need 4.2% (StateFarm) or 12% (Allstate) more every year, these companies point to all-around increased car prices, rising medical costs, and supply chain disruptions, among other reasons. The same inflationary pressures driving up costs for everyone else have reached insurance firms.

What are car owners supposed to do about these developments? Most aren’t making enough to keep up with price markups. Inflation is making an already-expensive part of American life even harder to maintain. No wonder 43% of Americans think gas prices are one of their most pressing concerns of 2022. As economist Richard Curtin explains, “consumers view high gas prices as a threat to their living standards and a threat to the ability of the economy.” Most Americans drive as a matter of routine, go gas prices touch several different aspects of their daily lives.

Individual consumers can’t do much about gas prices, but they can shop around for insurance quotes to make sure they get the best rate possible. They can take advantage of low mileage or safe driving discounts offered by insurance firms. There are even ways to drive that improve individual gas mileage. People who brake more gradually, avoid idling (like in drive thrus), and mostly drive below 50 mph get better gas mileage than those who don’t. Many Americans are also taking fewer car trips, saving on gas and insurance.

Vanessa Campbell has been a Senior Writer for more than a decade already. She has liaised closely with key members of the Marketing and Leadership team as well as key stakeholders, providing content support for concepts and ideas to take brands to the next level. She has been leading marketing campaign initiatives that have successfully thrived and prosper throughout the years.

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