$4.5 per gallon squeezes the middle class dry! To save money on gas, Americans can only skip steak and avoid going to bars.

Soaring oil prices are quietly reshaping the daily budgets of American consumers: they can't stop driving, so they can only cut back on steak and trips to the bar.

According to Bloomberg, due to the impact of the Iran war, the average price of gasoline across the U.S. has surpassed $4.5 per gallon, with California over $6. Despite the high prices, consumers have not significantly reduced fueling. For most Americans, commuting by car and driving children are necessary parts of life.

Gasoline expenditures are almost impossible to cut, so consumers can only reduce discretionary spending to balance their budgets. Philadelphia resident Avarisse Crawford said she has cut entertainment expenses, replacing steak dinners and bar gatherings with free park activities.

The situation in the Middle East continues to drive up oil prices, as the actual blockade of the Strait of Hormuz disrupts global crude transport. U.S. gasoline inventories have consequently fallen to the lowest seasonal levels since 2014. Morgan Stanley expects they will reach a historic seasonal low by the end of August.

In response to rising oil prices, the Trump administration has successively released strategic oil reserves, exempted the Jones Act, and discussed implementing a federal gasoline tax holiday, but the effects have not been obvious. With Memorial Day weekend marking the start of the busy summer travel season, rising demand may further strain already tight inventories.

Rising Oil Prices, Unwavering Demand

The current supply-demand situation provides strong support for gasoline prices. U.S. gasoline inventories are at their lowest seasonal levels in nearly twelve years, imports hover around the lowest seasonal levels in a decade, and refineries continue to shift capacity to jet fuel, further reducing gasoline output.

More crucially, demand remains remarkably resilient—despite gasoline prices breaking $4 per gallon, consumers have not significantly reduced consumption. Over the past four weeks, average gasoline prices were $4.32 per gallon, and actual gasoline consumption remained higher than the same period in 2022 and 2025.

Macquarie Global Energy Strategist Vikas Dwivedi noted, as long as prices stay below $5, the decline in demand will be very limited, but this also means the supply-demand gap will continue to widen. Carlyle Group Senior Advisor and economist Jeff Currie warned that the U.S. energy market is facing a brewing crisis, expecting problems to become evident in July.

Rigid Gasoline Demand, Discretionary Consumption Under Pressure

Facing high gasoline prices, many Americans have not reduced their travel, but have instead shifted the pressure to other areas of consumption.

According to Bloomberg, Barclays credit card data show that in the roughly two months following the outbreak of conflict in the Middle East, consumer spending on lodging, clothing, cinemas, and groceries all fell below seasonal levels; Bank of America Institute data show that spending on large home goods dropped outright in April, while spending on air travel and lodging remained about the same.

Although overall travel demand is still resilient, some indicators have shown signs of strain. A GasBuddy survey found that the proportion of Americans planning to travel by car for over two hours this summer is 56%, lower than last year's 69%. A survey by the American Automobile Association (AAA) found that about 10% of respondents would cancel trips due to gasoline prices, while about one-third said they would not be affected.

California offers a more direct comparison. Due to refinery closures, pipeline isolation, and special regulations, gasoline prices in California have long been higher than elsewhere. Elizabeth Graham, CEO of the California Fuel and Convenience Alliance, said that after statewide averages rose to $6.14 per gallon, fuel consumption at gas stations has fallen by 9% since autumn 2025.

Ordinary consumers have truly changed their decisions. Philadelphia resident Avarisse Crawford commutes by car five days a week and drives twice a month to visit relatives, so cutting back on driving is not an option. She has reduced her entertainment budget, replaced steak dinners and after-work gatherings with park activities, and given up her planned Florida road trip. She said, "Driving to Florida is no longer an option now."

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