Gasoline prices have soared more than 30% since February 28, when the United States and Israel began their war with Iran. As of March 31, the national average price per gallon was more than $4, according to AAA.
The Strait of Hormuz, which Iran effectively controls, is one of the world’s most important oil corridors, with 31% of the world’s oil flows passing through it, according to data from market intelligence firm Kupler. Iran has blocked the strait since the start of the war, causing major disruptions to the global oil supply chain and resulting in soaring gasoline prices around the world.
Rising gas prices could add further stress to Americans already struggling with the ongoing affordability crisis. With the prices of groceries and other necessities still rising, some people may be faced with difficult choices when they need to fill up their car with gas to get to work or take their children to school.
Despite being better equipped to deal with the shock of rising gas prices, some may be looking for ways to save money.
“For high-income people, rising gas prices are a headline. For low- and moderate-income people, it’s an item that directly impacts their financial security and daily life,” said Chris Jackson, a certified financial planner based in Charleston, South Carolina.
More than half of Americans say rising gas prices are having an impact on their household finances, according to a Reuters/Ipsos poll for the week of March 16.
Meanwhile, Americans appear increasingly pessimistic about the economy overall. According to a monthly survey released by the University of Michigan on March 27, consumer sentiment fell to a three-month low in March. The survey also found that consumers expect annual inflation to rise to 3.8% next year from 3.4% in February.
He said Jackson’s higher-income customers haven’t seen a big change in their behavior due to higher gas prices, but they are “being a little more selective about their discretionary spending and travel consolidation.”
For consumers looking to save on fuel or find space in their budgets amid high gas prices, here’s some advice some financial advisors are giving their clients.
“Turn frustrating line items into meaningful rewards”
Driving less to reduce gas costs is not an option for many people. In fact, 78% of Americans typically commute to work by car, according to 2023 Pew Research data.
“If you can’t save, it’s a good idea to maximize your gas spending by using a points credit card at the gas station,” says Jonathan Dane, CFP and certified financial analyst in Warrendale, Pennsylvania.
“One of the practical actions that we fully recommend is that if you’re going to spend more at the pump, make sure you’re getting a return on it,” he says. “With the right travel or cash back card, you can turn a frustrating item into a meaningful perk.”
If using a credit card isn’t a viable option, consider retail stores and gas stations with rewards programs. One example is Kroger’s Fuel Points program. The program rewards members with points for every dollar spent in-store, which can be used for savings at Kroger’s more than 1,000 gas stations in 16 states across the South and Midwest. Walmart+ members also receive discounts on gas at participating gas stations including Walmart, Exxon, and Mobil stations. Gas companies such as Shell and BP also have their own rewards programs to help drivers save money.
“If you use these points strategically, you can significantly reduce the price per gallon,” says Alex Bridges, a Houston-based CFP.
Reduce “nice-to-haves” and “identify small offsets”
For families who need or want to adjust their spending as gas prices soar, advisors recommend small changes that may seem pointless but can help make your overall budget more manageable.
“Until gas prices start to normalize, start cutting back on ‘nice-to-haves’ like convenience store openings, frequent DoorDash orders, and unnecessary Amazon orders,” says Ryan McGonigal, an investment advisor based in Rockville, Maryland.
Jackson said lower- and middle-income Americans may not have as much discretionary spending to cut, so they need to be “more strategic and more careful with their spending.” In some cases, that may mean temporarily cutting back on savings, he says. But initially, aim to have enough money set aside to cover at least one month’s expenses, he adds.
Reducing retirement benefits is usually a “last resort,” Jackson said. A good place to start is by reducing or pausing your cash savings for short-term goals, such as a vacation.
Jackson said he helps some clients “identify small offsets that don’t have a significant impact on their quality of life.” That might mean cutting back on eating out, food delivery, and non-essential shopping. You may also be able to save money by shopping around for cheaper phone plans and car and home insurance coverage, he says.
Sweta Bhargav, a Princeton, N.J.-based CFP, says she’s seen customers “focus on keeping their vehicles maintained and driving in a way that conserves fuel.” According to the U.S. Department of Energy, avoiding aggressive driving and speeding, regularly tuning your engine, and keeping your tires properly inflated can all help improve your vehicle’s fuel efficiency.
“These small steps add up over time,” Bhargav says.
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