Of all the financial foibles to come to the fore this year — stock market meltdown, higher mortgage rates and recession fears — none has hit the average American more forcefully than rising gasoline prices.

The price of a gallon of gas hit $5.00 for the first time ever this week, up more than 60% year to date.

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In 1953, the president of GM (GM), Charles Wilson, famously said "what was good for our country was good for General Motors."

Today, some 69 years later, America, for better or worse, still depends and runs on gasoline.

Soaring gas prices come as an unpleasant shock to Americans — a point not lost on President Biden who told the AP on Thursday “…if you want a direct barometer of what people are going to talk about at the kitchen table and the dining room table and whether things are going well, it’s the cost of food and what’s the cost of gasoline at the pump. I mean literally at the pump.”

So if gas prices are too high, what is one to do?

Three options: Buy an EV. Drive less. Buy Exxon Mobil (XOM) stock.

How we got here

Before you blow a gasket on me, understand that I’m kind of trolling you. My flip offsets are not necessarily immediate or realistic options. On the other hand you really should think about all three — which I’ll get back to shortly.

But first, let’s talk about how we got here.

The oil market has been volatile since COVID hit full bore in March 2020. The following month, crude prices actually went negative over fears the global economy would collapse.

Since then the price of crude has been climbing and now sits at $108 a barrel.

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Why? Demand for oil is up as the world shakes off the pandemic, while on the supply side there are lingering frictions like shipping issues and labor shortages. And, of course, Russia’s invasion of Ukraine.

But there’s another issue vexing the oil markets and gas prices, and that is the transition away from fossil fuels.

"In the oil and gas industry, corporations are playing it safe," says Glenn Richey, research director at the Center for Supply Chain Innovation at Auburn University. "They don't want to do more exploration or even advanced production, if they're afraid that the government is going to pull the carpet out from under them."

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To that point, on Wednesday, Biden wrote a letter to big oil companies, telling them: "At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable." (The American Petroleum Institute sent a letter back to the President refuting his points.) Simply put, Biden knows that his political fortunes, and those of his party, could be determined by the price of gas.

Much of this is out of the President’s — or even the oil companies’ — control. Putin, COVID, and OPEC all play a significant role in pricing. Prices could stay high for some time, or go higher, or fall, depending on which expert you ask.

One problem, three solutions

So what’s an American to do?

Well, the first suggestion is to drive less. Yup, I mean it.

We’re a bit entitled in the U.S., aren’t we? Our gas prices are low relative to many countries. In Hong Kong, gas costs $11 a gallon, in Norway more than $10 per gallon, and the rest of Europe pays $7-$8.

Number two, buy an EV. The math here changes when the price of gas goes from $2 to $5.

Tesla (TSLA) recently raised prices, which could signal higher demand and pricing power, or supply chain issues and higher input costs. Ford’s (F) F-150 Lightening All-Electric Truck is selling briskly, so be prepared to pay more than the sticker price at your local Ford dealer. And, of course, EVs aren’t a panacea.

“We have to remember, it's not low income households that are buying electric vehicles,” says Kenneth Medlock, an energy expert and professor at Rice University. “They're not at that price point yet. So it's not really a win, except for upper middle and upper income households.”

Point three, buy Exxon stock.

And by that I really mean various energy investments, including other oil stocks or ETFs. (Hint: Biden’s letter went to Exxon, Chevron (CVX), BP (BP), Shell (SHEL), Marathon (MRO), Valero (VLO) and Phillips (PSX).)

Even including this week's 14% slide, shares of Exxon are up 40% this year; the S&P 500, in contrast, is down over 20%.

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Becoming less reliant on gasoline is an inevitable imperative for America. It’s amazing how tenuous that relationship is, by the way. In only a matter of weeks or even days, the system can become stressed.

I’m old enough to remember the gas lines and rationing of the 1970s — which got ugly, fast. So, too, with gas shortages here in New York in October 2012 after Superstorm Sandy.

As noted above, there are other options.

But one thing’s for sure — what’s good for America isn’t $5 gas.

This article was featured in a Saturday edition of the Morning Brief on May 14, 2022. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Follow Andy Serwer, editor-in-chief of Yahoo Finance, on Twitter: @serwer

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