In Small Towns Are Booming, Thanks to Rising Oil Prices, The Wall Street Journal’s Rebecca Elliot and Harriet Torry cite PWBM research on the recent rise in gas prices. Over the past year, crude oil and gasoline prices are up 60 percent and 27 percent, respectively. Higher prices have led to higher oil production, which could keep prices from climbing even higher.
PWBM finds that under the current higher gas prices the bottom half of the income distribution loses at least half of this years tax cuts to increased spending on gas. Figure 1 shows that if gas prices continue to rise households will lose even more of their gains from the tax cut.
Figure 1: Tax Change Net of Gas Expenditure Change in 2018 for Households in the 40-50 AGI Percentile by Selected Gasoline Prices