REMEMBER JULY 2008? The financial system was faltering following Bear Stearns’s March 2008 forced merger with J.P. Morgan Chase. That summer, Fannie Mae and Freddie Mac needed special assistance. The Global Financial Crisis was almost upon us.
But many folks forget that, at that time, another crisis was coming to a head—a global energy squeeze.
In 2008, I was a busy 20-year-old driving my 1998 Toyota Camry around Jacksonville, Florida, taking summer classes and working a part-time job. Filling up my 15-gallon tank every two weeks cost many hours of work at the local grocery store.
Back then, as the cost of oil soared to near $150 a barrel, retail pump prices averaged more than $4 a gallon. Those were truly tough times for countless families across the country. Today’s average gas price of $3.25 might feel pricey. But it pales in comparison to the $4.11 top in 2008. Adjusted for inflation, that’s equal to a whopping $5.24 today.
Gassing up your car isn’t the only energy-related issue right now. Heating your home could put a bigger dent in your budget this winter. U.S. natural gas, which powers roughly 40% of the country during the winter, has more than doubled in price over the past 12 months. Sure, utility companies hedge some of their costs. But residents and businesses will eat a substantial part of the increase.
The data suggest U.S. consumers are well-positioned to weather the coming energy storm. In aggregate, we have plenty of cash in our coffers, thanks to increased savings rates over the past year and a half. Still, we should be prudent and revert to those trusty old energy-saving strategies, such as combining multiple errands in each driving trip, turning down the heat and turning off lights when we leave a room.
We should also be grateful. Energy woes in Europe and Asia are far worse—and the situation overseas will almost certainly turn dire this winter. Rolling blackouts and sky-high electricity prices will be realities for millions of people around the world.