Gas prices have spiked more than 30% since Feb. 28, when the U.S. and Israel started the war with Iran. The national average price per gallon is over $4 as of March 31, according to AAA.
The Strait of Hormuz, which is effectively controlled by Iran, is one of the world’s most important oil passageways, with 31% of global crude oil flows moving through the waterway, according to data from market intelligence firm Kpler. Iran has blocked the strait since the beginning of the war, causing a major disruption to the global oil supply chain and, as a result, higher gas prices around the world.
Rising gas prices may add stress for Americans already struggling through the ongoing affordability crisis. Some may face tough choices as they need to put gas in their cars to get to work or shuttle their kids to school while prices for groceries and other essentials remain elevated.
Others may be better equipped to handle the shock of higher gas prices, but still look for ways to save.
“For higher earners, rising gas prices are a headline. For lower and middle earners, they’re a line item that directly affects financial stability and daily life,” says Chris Jackson, a certified financial planner based in Charleston, South Carolina.
Over half of Americans say the rise in gas prices has affected their household finances, a Reuters/Ipsos poll from the week of March 16 found.
Meanwhile, Americans seem to be increasingly pessimistic about the overall economy. Consumer sentiment sank to a three-month low in March, according to the University of Michigan’s monthly survey released on March 27. The survey also found that consumers expect annual inflation to rise to 3.8% over the next year, up from 3.4% in February.
Jackson’s higher-earning clients aren’t making huge changes to their behavior as a result of higher gas prices, he says, but they are “being a bit more selective with discretionary spending or consolidating trips.”
For consumers looking to save on fuel or find extra room in their budgets while gas prices are high, here’s the advice some financial advisors are giving their clients.
‘Turn a frustrating line item into meaningful rewards’
Driving less to mitigate the cost of gas isn’t an option for many people. In fact, 78% of Americans usually drive to work, according to Pew Research data from 2023.
If you can’t cut back, it can be smart to get the most out of your gas spending by using a rewards credit card at the gas station, says Jonathan Dane, a CFP and chartered financial analyst in Warrendale, Pennsylvania.
“The one practical move we’re recommending across the board: If you’re going to spend more at the pump, make sure you’re earning on it,” he says. “The right travel or cash back card can turn a frustrating line item into meaningful rewards.”
If using a credit card isn’t a viable option for you, look into retailers and gas stations with rewards programs. One example is Kroger’s Fuel Points program, which gives members points for every dollar they spend in-store that can be used to save money at Kroger’s more than 1,000 gas stations across 16 states in the South and Midwest. Walmart+ members can also get discounts on gas at affiliated fuel stations including Walmart, Exxon and Mobil stations. Gas companies like Shell and BP also have their own rewards programs that can help drivers save.
“If used strategically, those points can meaningfully reduce the price per gallon,” Alex Bridges, a Houston-based CFP, says.
Cut back on ‘nice-to-haves’ and ‘identify small offsets’
For families who need or want to make spending adjustments while gas prices are elevated, advisors recommend small changes that may not seem meaningful, but can help keep their overall budgets manageable.
“Start trimming the ‘nice-to-haves’ like convenience store runs, frequent DoorDash orders and unnecessary Amazon orders until gas prices begin to normalize,” says Ryan McGonigal, an investment advisor based in Rockville, Maryland.
Middle and lower-earning Americans may not have as many discretionary expenses to cut, Jackson says, so they need to be “much more tactical and mindful of their spending.” In some cases, that may mean temporarily cutting back on saving, he says. However, aim to have enough put away to cover at least a month’s worth of expenses first, he adds.
Scaling back your retirement contributions is typically a “last resort,” Jackson says. Reducing or pausing cash savings for shorter-term goals like a vacation is a better place to start.
Jackson says he helps some clients “identify small offsets … that don’t meaningfully impact quality of life.” That could be cutting back on dining out, food delivery and non-essential shopping. You may also be able to find savings by shopping around for cheaper phone plans or car and home insurance coverage, he says.
Princeton, New Jersey-based CFP Sweta Bhargav says she’s seen clients “focus more on keeping up with vehicle maintenance and driving in ways that save fuel.” Avoiding aggressive driving and speeding, as well as getting routine engine tune-ups and keeping tires properly inflated, can all help improve vehicle fuel efficiency, according to the U.S. Department of Energy.
“These small steps add up over time,” Bhargav says.
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