Inflation has continued to be a top-of-mind issue for most Americans this holiday season, with good reason. The U.S. annual inflation rate across all goods rose to over 7% last year, and has remained at that level throughout 2022—spiking as high as 9.1% in June, its highest level since 1981.

One of the most visible drivers of inflation, as is usually the case, has been the cost of energy—particularly gasoline, the price of which increased nearly 50% in the first six months of the year. There are few other products we as consumers purchase where we are so acutely aware of its price, measured consistently by the gallon with the price displayed on huge digital signs that fluctuate daily. Making any movement in that price extremely noticeable.

I have argued in a previous post that a higher price for gasoline is desirable. The simple economic rationalization is that higher prices lead to decreased gasoline consumption, hence reducing the negative impact of carbon emissions on the planet and diminishing our enrichment of authoritarian regimes around the world.

High gas prices were repeatedly exploited as a political talking point through the summer and fall, as if the rise were somehow the fault of incumbent Democrats. Inflation did not prove to be the political cudgel its shrillest complainers hoped it would be in the midterm elections. I’d like to believe this is because American consumers, and voters, are more sophisticated in their understanding of so-called “pocket-book” issues.

Gas prices spiked in June, but are now only 13% higher than January (Source: BLS)

While the price of gas rose rapidly in the first half of the year, it was starting from a very low price—almost the exact CPI as it was a decade ago. In fact, gas prices were actually below the 2012 price for nine years, only catching up in 2022. Further, after peaking in June, the price of gasoline has actually fallen by 23% on average. At its current price index, gasoline is only 14.8% more expensive than it was 10 years ago. Adjusted for wage increases, gas has gotten relatively less expensive compared to other goods and services.

Ten year average annual CPI of Gasoline benchmarked to College Tuition, Medical Care and Rent (Source: BLS)

But the biggest reason I believe most Americans call bullshit on the weaponization of gas prices in our political narrative is that they see costs of so many other things rising inexorably. Notably absent in the pitched rhetoric of politicians squealing over high gas prices during the November campaigns were complaints about high prices of housing, healthcare, and education. High gas prices may make you feel poor at the pump, but high prices for rent, medical bills, and college tuition make you feel poor for a lifetime.

Compare the CPI increase in these areas to the price of gasoline. Over the same 10-year time horizon, the cost of college tuition has increased 28.5%, nearly twice that of gasoline. Medical care expenses have increased even more, rising 31.6% over that time. And average rent prices tops them all, rising 38.4% from 2012 to today. Unlike gas, inflation in these areas has only gone up—becoming a bigger and bigger piece of the average household budget.

If we are really concerned about inflation, then these are the areas to focus on. Investing in education is one of the best ways for someone to climb the economic ladder, but most of the lower- and middle-income college students who do go to college are saddled with crippling student loan debt.

Spiraling healthcare costs are another unacceptable inflationary crisis. Two thirds of people who file for personal bankruptcy do so because of healthcare costs. Yet many of the same politicians complaining about high gas prices have fought every facet of healthcare reform, practically making the repeal of the Affordable Care Act their main political goal.

Owning real estate is one of the most powerful ways of creating wealth. But with median home prices in the U.S. approaching half a million dollars and over $800K in California, many Americans are completely priced out of home ownership. Relentless rent increases and a lack of affordable housing has driven many people out of expensive urban areas, or worse—into home insecurity, with the rate of homelessness rising significantly since 2018. Yet, those complaining about gas prices also fight the creation of affordable housing.

I don’t understand why or how this topic became so politically fraught. Reducing costs for housing, healthcare, and education shouldn’t be a partisan issue. Making these things affordable is essential for achieving the American dream, and helps every American, of every party and socio-economic class. Why don’t we ever seem to address in a bipartisan way these real drivers of inflation?

Yes, higher gas prices suck. But that feels like more of an inconvenience than a crisis, particularly compared to these other inflationary woes that result in insurmountable debt, personal bankruptcy, and homelessness. Unfortunately, as we move into a divided Congress, political progress on these issues seems unlikely. So in the meantime, during this season of giving, I encourage you to join me in supporting charitable organizations that address these issues. In Northern California, some of my favorites include Peninsula Healthcare Connection for accessible healthcare, United Hope Builders for a unique approach to affordable housing, and The Peninsula College Fund for helping everyone access higher education.

Our Real Inflation Woes