Like the rest of the country, Alaskans have been paying a lot more for gas in recent weeks due to ongoing conflict in the Middle East. It was noticeable to Bryant Fiorenzi last Sunday in Fairbanks as he filled up a 2010 Mercury Mariner.
“I can't remember a time in my driving life where I was paying $4.50 a gallon,” he said. “It's really good on gas compared to most cars, but that doesn't really help much when the gas is $4.50 a gallon.”
Fiorenzi has been carpooling with his girlfriend for his half-hour work commute to save money.
Gasoline prices have soared nationwide since the United States and Israel went to war with Iran in late February. The average price of a gallon in the state costs about a dollar more today than it did a year ago, according to AAA, averaging more than $4.60 a gallon. Alaska is also about 50 cents more expensive than the national average.
Kelli Johnson has also noticed the increase while pumping gas at the Fred Meyer in south Anchorage. She fills up here because she earns fuel points for each dollar she spends shopping. She’s purchasing $10 worth at a time to get by until payday, which buys her just over two gallons of gas.
“That $10 right there is getting my husband to work. I wish I could go like, $50, $60 a week,” Johnson said. “It’s going super fast.”
Johnson said the higher prices are forcing her to reallocate money from other parts of her budget, like groceries.
“I'm dipping into my savings just to get back and forth,” she said.
Johnson doesn’t expect gas to become cheaper anytime soon.
Price volatility is also sparking uncertainty in some rural Alaska villages, where gasoline is barged in, locking in fuel prices until the next shipment arrives. It’s not yet clear how the ongoing war with Iran will affect those prices.
When gas prices rise, Kevin Berry, chair of the economics department at the University of Alaska Anchorage, said consumers don’t typically change their buying habits in the short-term. Although, he said that could change if prices stay elevated.
“People have to go to work, they have to be able to get to the grocery store. They have a lot of trips that they're not elective,” Berry said. “In the long run, that person who's drawing from their grocery budget may start figuring out how to take the bus to different places, or they may start carpooling or doing other things to reduce the amount of gasoline that they purchase.”
A top Federal Reserve official said in April that the Fed might have to cut its key interest rate if higher gas prices cause the economy to slow. Rising gas prices are regressive and disproportionately affect low-income households.
Households feel the squeeze of high gas prices differently, Berry said, especially in a place like Anchorage.
“We've got commuters from the (Matanuska-Susitna) Valley who are driving an hour every day both ways. They're definitely going to feel it more,” Berry said.
Berry got a new vehicle last spring and said if he knew gas would be pushing five bucks a gallon, he would’ve opted for an electric vehicle. It’s a switch some Americans are making amid high gas prices.
As soon as Anchorage’s spring breakup dries out, Berry plans to trade his truck with his bike, which will add at least half an hour to his transit time.
“I am going to do my best to not drive to work again, because it's a $100 tank of gas. I'd rather not pay for that just to go to my job,” he said. “The one upside is – this happening right before summer meaning that maybe more people are able to do that.”
A Reuters poll in March found many Americans had taken a financial hit due to rising gasoline prices.
Fiorenzi, with the Mercury Mariner in Fairbanks, said rising costs across the board have left him with a gloomy economic outlook.
“I just think it's gonna be really hard for this up-and-coming generation, the one that wants to move out, get out of their parents houses, stuff like that, because these prices are killer,” Fiorenzi said.
It’ll likely be a while until Alaskans see gas dip back below $4 a gallon. President Donald Trump said earlier this month that the price of oil and gas could remain high through the November midterms.
