Squeezing the middle class at $4.5 per gallon! To save money on a full tank, Americans have to skip steaks and bars

Soaring oil prices are quietly reshaping the daily budgets of American consumers: since cars are essential, the only choice is to eat less steak and cut back on bar visits.

According to Bloomberg, affected by the Iran war, average gasoline prices across the United States have surpassed $4.5 per gallon, with California prices even exceeding $6. Despite the high prices, consumers have not significantly cut back on fuel purchases. For most Americans, driving for work and taking kids to school are just basic needs of daily life.

Gasoline spending is nearly impossible to reduce, so consumers can only cut discretionary spending to balance their budgets. Philadelphia resident Avarisse Crawford said she has reduced entertainment spending, replacing steak dinners and bar gatherings with free activities in parks.

Ongoing tensions in the Middle East have continued to push up oil prices, with the actual blockade of the Strait of Hormuz disrupting global crude oil shipments. U.S. gasoline inventories have fallen to the lowest seasonal level since 2014, and Morgan Stanley expects them to hit a fresh seasonal low by the end of August.

In the face of persistent oil price increases, the Trump administration has successively released Strategic Petroleum Reserves, waived the Jones Act, and discussed implementing a federal gasoline tax holiday, but the effects are not yet clear. As Memorial Day weekend marks the start of the summer travel season, the rising demand may further worsen already tight inventories.

Rising Oil Prices, Steady Demand

The current supply-demand pattern strongly supports gasoline prices. U.S. gasoline inventories are at their lowest levels in nearly twelve years for the season, import volumes are hovering near decade-long seasonal lows, and refineries continue to shift their capacity toward jet fuel, further squeezing gasoline output.

More importantly, demand remains extremely resilient—even as prices break through $4 per gallon, consumers have not significantly reduced their gasoline purchases. Over the past four weeks, the average price per gallon was $4.32, while actual gasoline consumption stayed above the levels seen in the same period in 2022 and 2025.

Macquarie Global Energy Strategist Vikas Dwivedi believes that as long as the price remains below $5, the drop in demand will be very limited, but this also means the supply-demand gap will keep widening. Jeff Currie, Senior Advisor and Economist at Carlyle Group, warns that the U.S. energy market is facing a looming crisis, with problems expected to become pronounced in July.

Gasoline Demand Remains Rigid, Discretionary Spending Feels the Pressure

Faced with high oil prices, many Americans have not decreased their travel, but instead have shifted the burden to other areas of their spending.

According to Bloomberg, data from Barclays credit cards shows that in the roughly two months after conflict broke out in the Middle East, consumer spending on lodging, apparel, cinemas, and groceries was all below seasonal levels; research from Bank of America Institute shows that in April, spending on large home furnishings saw a clear decline, while spending on air travel and accommodation remained essentially flat.

Although overall travel demand remains resilient, some indicators are already showing signs of weakness. A GasBuddy survey found that 56% of Americans plan to drive more than two hours this summer, down from 69% last year. A survey by the American Automobile Association (AAA) shows that about 10% of respondents will cancel trips because of gasoline prices, while about one-third stated they would not be affected.

California offers a more direct reference point. Due to refinery closures, pipeline isolation, and special regulations, California gasoline prices have long been higher than the national average. According to Elizabeth Graham, CEO of the California Fuels & Convenience Alliance, after the state's average price climbed to $6.14 per gallon, gasoline consumption at gas stations has dropped by 9% since autumn 2025.

Ordinary consumers have already made real changes in their decisions. Philadelphia resident Avarisse Crawford commutes five days a week and drives to visit relatives twice a month. Reducing driving is not an option for her. She has cut her entertainment budget, substituting park activities for steak dinners and after-work gatherings, and has abandoned her planned road trip to Florida. She said, “Driving to Florida is just not an option anymore.”