To ease gas price pain, keep workers at home

Russia's invasion of Ukraine is fueling sticker shock at the pump for Americans and sharpening unease about inflation.

Why then are we in such a hurry to end pandemic-era work-from-home policies and force employees to commute to offices again?

"It's time for Americans to get back to work and fill our great downtowns again," President Joe Biden said during this month's State of the Union address. "You can't stay home in your pajamas all day," New York City Mayor Eric Adams said in a recent speech aimed at encouraging local employers to bring workers back to the city's still relatively empty offices.

Both comments were well-intentioned: There is a cost in keeping wide swaths of the working population out of city skyscrapers — to local restaurants, to fare-funded mass transit systems and to broader perceptions of urban vitality and safety. Declining COVID case counts across the U.S. present an opportunity to reverse some of that pain.

But there's also a cost to resuming the pre-pandemic daily grind, one that's become only more acute as Russia's hostilities and increasingly aggressive sanctions in response send shock waves through energy markets.

Driving was the most popular commuting option in the U.S. in 2017 but also the most expensive, with an annual median cost of $2,782, according to a survey sponsored by the Department of Housing and Urban Development and conducted by the U.S. Census Bureau.

The average national cost of gas was elevated that year relative to recent history as the oil industry recovered from a 2014-2015 slump but pales in comparison to today's prices. U.S. regular unleaded prices averaged $2.49 a gallon in 2017; the national cost hit a record on Monday at $4.17, according to AAA. (Adjusted for inflation, gas prices were higher in 2008, and they don't cause as much pain as they used to. Still, Americans are feeling the pinch.)

Both the European Union and the U.S. are racing to rejigger their energy strategies as Western leaders contemplate ways to increase the economic penalties for Russia's decision to start an unprompted war in Ukraine. The Biden administration on Tuesday announced a ban on U.S. imports of Russian fossil fuels including oil. The U.K. will announce a similar move, though it will continue to allow imports of natural gas and coal, Bloomberg News reported.

Meanwhile, the European Union's executive arm is mapping out a path to curb its use of Russian gas by almost 80% this year.

Such a reordering of energy markets — considered unthinkable only a few weeks ago — would obviously entail a reconsideration of supply, whether the source is U.S. shale companies, alternative imports of liquid natural gas or renewable energy. But these policies would be more effective and ultimately less painful at home if governments consider the demand side of the equation as well.

Encouraging companies to let employees continue working from home — as so many did for the better part of the past two years — would seem a decent place to start.

Fossil fuel demand collapsed during the pandemic as cars stayed parked, businesses closed temporarily and global air travel ground to a virtual halt. The U.S. consumed about 124 billion gallons of finished motor gasoline in 2020, or roughly 8 million barrels a day, according to the U.S. Energy Information Administration (EIA). That was the lowest level since 1997 and a 14% slide from the use record set in 2018.

It wasn't that long ago (April 2020, to be exact) that oil prices briefly turned negative as the demand drop fueled an inventory glut.

Interestingly, even though people spent significantly more time at home during 2020, U.S. residential energy consumption declined relative to 2019 as the benefits of relatively warmer winter weather curbed demand for natural gas and other heating sources and offset higher retail electricity sales to the sector, according to the EIA.

While there are undoubtedly economic knock-on effects, the mass COVID experiment in working from home wasn't the drag on productivity that pajama critics like New York's mayor seem to envision. This is something we know how to do and have generally done quite well.

As a group, Americans who previously drove to work saved an estimated $758 million a day by working from home instead during COVID, according to a 2020 analysis by Upwork economist Adam Ozimek. That includes $183 million in direct commuting cost savings, plus the value of recouped time previously spent in the car and the environmental and safety benefits of having fewer drivers on the road.

Before the war in Ukraine, many Republicans framed inflation as a political failure on the part of Biden and some have drawn unflattering (and often poorly argued) comparisons to President Jimmy Carter, who battled his own crisis of sky-high energy prices. Carter tried to reduce the United States' dependence on foreign oil in part by appealing to Americans' sense of civic self-sacrifice, infamously donning a cardigan sweater as he urged constituents to turn down thermostats. A call for Americans to curb their driving risks reviving the Biden-Carter comparisons. The difference now, however, is that working from home is incredibly popular.

Some 60% of workers with jobs that can be done from home say they'd like to stay remote all or most of the time once the pandemic fades, up from 54% in 2020, according to a January Pew Research survey. Among workers whose offices are accessible now, more than three-quarters said a chief reason that they were still teleworking all or most of the time was because they preferred it.

As patriotic sacrifices go, avoiding the office commute is an easy sell.