High gas prices seem unavoidable in the current economic backdrop. Nearly 75% of U.S. drivers have said that they are suffering financially due to the rising fuel prices. Last week’s national average for regular gasoline was $4.15 a gallon, significantly higher than $2.87 a year ago. Gas prices followed the trend when crude prices rapidly climbed last month due to the Russia-Ukraine war. However, when crude prices corrected themselves, gas prices eased but remained somewhat high due to what economists call the ‘rockets and feathers’ phenomenon.
Simultaneously, wages have climbed up through March, with unemployment falling, indicating a hot labor market. Over the past year, wages went up 5.6%, which is vastly faster than the 2-3% annual pay gains during the 2010s. The rapid pay gains also translate into higher compensation expenses for trucking companies. However, expanding intermodal operations should be excellent support for the industry.
