Ken Blackwell

At the beginning of this year, many Americans opened their paychecks to find that their take-home pay was suddenly less than it had been the previous month. The payroll tax cut had expired, resulting in the average American worker owing an additional $700 in payroll taxes this year compared to last.

For a two-parent household, that’s $1,400 less with which to pay the bills, put food on the table, and fill up the gas tank. But it’s far from the only added expense straining family budgets. Oil prices, in particular, have skyrocketed over the past decade, imposing higher direct and indirect fuel costs on families during already tough economic times.

Just like the payroll tax increase, increased fuel costs in the form of high gasoline prices are eating up paychecks while providing no additional economic benefit or utility. In 2012, the average household spent a record $2,912 on gasoline. Compared to the 2002 average of $1,235, that is an extra $1,677 that families have been forced to spend on transportation costs. That’s money that could otherwise be saved or used to grow the economy, such as by starting a new business.

While American families are bearing a considerable brunt of the burden, high oil prices and oil dependence have negative economy-wide impacts. In 2012, Americans spent a record $900 billion on petroleum products, and a recent study found that high oil prices added $1.2 trillion to U.S. debt over the past decade. This economic drag is part of the reason our recovery from the Great Recession has been anemic and the unemployment rate remains high.

To be clear, it’s not America’s great oil companies causing this, as some of their anti-corporate, anti-capitalist detractors might want you to believe. The fact is that the price of a barrel of oil – whether that oil is pumped in North Dakota or Saudi Arabia – is determined by a global oil market that is affected by supply and demand factors around the world. Anything and everything – from economic growth in China to instability in a major producing region like the Middle East – can send prices higher. This geopolitical exposure of the global oil market to volatility explains why Americans are paying so much for gas despite record domestic production.

Ken Blackwell

Ken Blackwell, a contributing editor at, is a senior fellow at the Family Research Council and the American Civil Rights Union and is on the board of the Becket Fund for Religious Liberty. He is the co-author of the bestseller The Blueprint: Obama’s Plan to Subvert the Constitution and Build an Imperial Presidency, on sale in bookstores everywhere..
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