Why gas prices are rising – and what employers can do about it

Are you emptying your wallet to fill up your gas tank? You’re not alone. As of July 1, 2022, the national average cost of a gallon of gas was $4.842 – an increase of 50% compared to last year.

And this pain at the pump is felt nationwide. From $6.27 in California to $4.60 in Florida, all 50 states saw gas costs skyrocket, with none reporting an average price of less than $4.35 a gallon.

So why is this happening and how can employers help their employees mitigate the cost of commuting? Keep reading for our full breakdown.

Why are gas prices increasing?

The continual climb in gas costs isn’t due to one central cause but rather a convergence of several factors. First, while the US is the world’s largest supplier of crude oil, since the pandemic, our nation has faced capacity issues when turning this oil into usable gasoline. America’s capacity to produce gasoline is currently down 900,000 barrels per day when compared to the end of 2019.

While there have been issues on our own soil, the international supply of gasoline has also faced difficulties since the pandemic. Gas prices have been rising globally since December 2021 resulting in crude oil doubling in cost.

Of course, in 2021, Russia was the third-largest global producer of gasoline. Now, sanctions and political tensions have cut off one of the biggest suppliers of oil, resulting in surging prices.

And while the supply of gasoline has been a major factor in the rise of gas prices, demand has also played a role. Americans, determined to enjoy their summers after strict quarantine rules, are traveling more by car in the coming months. On Memorial Day alone, 39 million people drove 50 miles or more – an increase of 3 million compared to last year.

How can companies help their employees?

With so many factors contributing to rising gas costs, economists can’t predict when – and if – prices will return to their 2021 levels. As a result of this uncertainty, many workers have debated quitting their current jobs to take a position closer to their homes (or where they don’t even need to leave home) in order to save on gas costs.

Don’t lose loyal employees to growing commuting costs. Here are five ways you can help your employees during these times of high gas prices:

Offer more flexibility

Do your employees work 9 to 5? Chances are they’re spending some of their commute time sitting in traffic during rush hour and wasting gas. Instead, offer flexible start and end times so your workers can avoid heavy traffic hours and avoid paying a fortune at the pump. 

Give gas cards as bonuses

Gasoline gift cards can be bought in bulk at various retail locations and make great incentives for workers. Offer them as a “thank you” during employee reviews, as a prize for employees of the month, or as a bonus if a project performs better than expected. They’ll appreciate it more than your standard free water bottle.

Encourage remote working

During quarantine – when remote working was the norm – gas prices dipped to an average of $1.77 in April 2020. By offering remote working as an option for your employees, they’ll not only save on commuting costs, but the act could help bring prices back down. Our own research report, Resetting Normal, even found that productivity increases with remote work, so it’s a win-win for everyone.

Organize carpools

Have HR set up a system of interested employees where workers can find people who live close by to carpool with. If you share office space with other companies or are located within a business park, coordinate with other workplaces to expand your carpooling network. As an incentive, you can dedicate a few parking spots as “carpool only.”

Create commuting allowances

Another option is to supply your employees directly with funds they can use to offset the cost of gas. By giving your workers an allowance each pay period to cover commuting costs, they won’t have to dip into their paycheck when they’re at the pump. Consider also providing bus passes or other public transport tickets if available.

Today’s job market is unpredictable. From rising gas prices to sky-high inflation and a possible recession, the best way to stay ahead is to be prepared and keep your workforce agile. At Adecco, we’ll help you be up to date on all the current market trends while also connecting you with the right qualified talent to keep your workplace thriving.  Contact us today to see how we can help.