While high gas prices are a heavy burden on low-income consumers—it’s the middle class that’s being impacted the most from rising fuel costs, says one economist.
“There’s this narrative or understanding that higher gas prices disproportionately impact low-income people. And it certainly is a heavy burden on them,” Tim Quinlan, Wells Fargo senior economist, told Yahoo Finance Live.
“But the group that actually is impacted the most—the ones that spend a larger share of their disposable income on gasoline — is actually the middle class,” he said.
“The way to rationalize that is that lower income households are actually taking the bus or walking to work,” said the economist.
“Middle income houses may have the benefit of a second vehicle, which of course requires more gas,” he added. “So the outlays on the middle class are actually larger even adjusted for the size of their income.”
The average price of gas in the U.S. currently sits at $4.24, according to AAA. California’s gasoline is well north of $5 per gallon.
Prices above $4 tend to lead to demand destruction, as noted by one energy expert.
Western nations imposed sanctions against Russia, a world crude exporter. The U.S. and U.K. also implemented a ban on Russian oil imports.
Ines is a stock market reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre