Prices for gasoline and other energy goods had already been rising before they spiked in the first quarter of 2022, after the Russian invasion of Ukraine. Personal consumption expenditures on gasoline and other energy goods (excluding natural gas and electricity) in that quarter were $451 billion, which is about $150 billion more than in the first quarter of 2021.
Since 2005, personal consumption expenditures on gasoline and other energy goods have averaged $343 billion per quarter. These expenditures are highly variable, however. Not surprisingly, they usually fall during recessions, which was especially clear during the recent recessions of 2008-09 and 2020. Many households curtailed travel when the COVID-19 pandemic struck in 2020, which reduced the demand for gasoline and pushed sales down precipitously. Gasoline sales have since rebounded, and nominal consumer expenditures on gasoline and other energy goods were already above average before the invasion of Ukraine.
The first FRED graph shows that these personal consumption expenditures on energy have risen significantly since World War II in nominal terms. Of course, the general level of prices has risen significantly as well, and consumer expenditures on all goods and services have grown with household income. (For more on real versus nominal gas prices, see this recent FRED Blog post.)
One indicator of the burden of higher energy prices on households is reflected in the share of total consumer expenditures devoted to gasoline and other energy goods. So, the second FRED graph plots the ratio of personal consumption expenditures on gasoline and other energy goods to total personal consumption expenditures. We see that the share of consumption devoted to energy has generally declined since World War II.
This trend was significantly interrupted during the 1970s and again before the 2008-09 recession. War in the Middle East and the Arab oil embargo in 1973, the Iranian revolution in 1978, and Iraq’s invasion of Iran in 1980 all fueled oil price spikes as well as spikes in the share of personal consumption expenditures devoted to energy purchases. Since then, the share of personal consumption expenditures devoted to energy purchases has consistently been below the share that prevailed before the 1970s.
Despite the sharp increase in gasoline prices in the first quarter of 2022, purchases of gasoline and other energy goods comprised just 2.7% of total consumer expenditures in that quarter, which is about average for the period since 2010. Additional energy price increases could drive the expenditure share higher than it was in the first quarter. But currently, the share of personal consumption expenditures has been well below the peak of 6% reached in 1980.
How these graphs were created: First graph: Search FRED for “Personal consumption expenditures: Nondurable goods: Gasoline and other energy goods.” The chart appears as is with the default dates. Second graph: Search FRED for “Personal consumption expenditures: Nondurable goods: Gasoline and other energy goods.” From the “Edit Graph” panel, add a series to the workspace by searching for “PCEC” under “Customize data.” Add the series. For the formula, enter a/b*100 to express as percentage and click “Apply.”