PATCHWORK NATION -- March 2, 2011 at 1:30 PM ET
Pain at the Pump Across Patchwork Nation
As protesters march throughout the Middle East, forcing regime changes, they have set the oil markets into a panic.
On Feb. 1, crude oil futures were trading at just under $75 a barrel. By Feb. 28, they were trading at just under $100. Those numbers aren't bad if you are, say, a speculator, but they have serious ramifications for a country built on the automobile that is struggling to move past the worst recession in decades.
And while no one likes higher gas prices, some places have been hit a lot harder than others when you look at the increases in Patchwork Nation's 12 community types.
Most of the 12 county types that Patchwork Nation studies have seen the price of a gallon jump by about 18 cents since December 2010. One community type, Tractor Country, has seen prices jump 20 cents. And another set of counties, the Mormon Outposts, has seen an increase of 26 cents, according to price data from gasbuddy.com analyzed by Patchwork Nation.
The gas price increases mean the recovery may take different shapes - and go in different directions - in the broad canvas of the United States. In some places, the hikes may be a bump in the road, in others they could lead any positive momentum in a ditch.
And that's especially true with the prospect of $4-a-gallon gas on the horizon for the summer.
Gas Price Increases by Community Type, December to February
|Community Type||Dec. Price Avg.||Feb. Price Avg.||Percentage Increase in Price Dec. - Feb.|
|Campus and Careers||$3.00||$3.17||5.6%|
How Elastic Is Your Car?
One way to understand how significant and different the reactions to the big bump in prices can be is through "elasticity." When gas prices rise, one common response is "well, I'll drive less." But in some places the amount of driving one can eliminate is limited - it's less "elastic."
In rural agricultural Tractor Country, for instance, where gas prices currently sit at about $3.15-per-gallon, there may be less traffic, but cities and businesses are often spread out. And then there is the simple matter of the work involved, says Steve Hoogland, editor of the local weekly newspaper in Sioux Center, Iowa, a Tractor Country community in that state's northwest corner.
"Right now during the winter, it probably doesn't hit home in a dramatic way as farmers aren't actually doing much in the field here in Iowa," he writes in an e-mail. "However, as February turns to March and then April and planting season hits, it will make a bigger dent in what the farmers do. The increased fuel prices will eventually rattle their way through the food chain to the food trays, but it's going to be a hardship for producers and those who transport it."
There is also the matter of what you drive. Low miles-per-gallon vehicles like pickup trucks and SUVs aren't about outdoorsy style in the Tractor Country, they are a way of life. Drive by Sioux Center's Tri-State Livestock Auction House and you won't likely find a single Prius. At least we've never seen one on all our trips there.
The rural, small-town Service Worker Center counties have seen a smaller increase -- 17 cents per gallon to the second highest per-gallon price $3.18 -- but they face some of the same challenges. Driving is a way of life in many of these towns. There usually are no trains or buses to catch to work like there are in the big city Industrial Metropolis counties or the Monied Burbs.
Kip Ward, who lives in the Service Worker Center of Lincoln City, Ore., estimates that he drives between 400 and 500 miles a week.
The Service Worker Centers face an additional challenge if prices rise too high. Many of them, including Lincoln City, make a good living off tourism - as we have noted before. If gas prices rise too much the out-of-towners that come every summer to spread their wealth, like those from the Monied Burbs, may make fewer trips or cut back on spending if they do come to town.
And these Service Worker counties have already taken the brunt of the recession with higher unemployment rates.
A More Uneven Recovery
More to the point, an 18 cents-a-gallon increase has a different meaning to communities depending on the kind of incomes there.
In the wealthy Monied Burbs, an extra $20- or $40-a-month spent on gas certainly isn't good news, but people and families there are more able to absorb it. The gas price bump may mean less monthly savings or combining trips to the store.
But in relative terms an extra $20- or $40-a-month hits a place harder if the people there make less. It cuts into meals at restaurants or spent at the local merchants.
As we have pointed out in recent posts, as the recovery limps along, some places - like the Monied Burbs - seem to be slowly emerging. The increase in gas prices could slow that improvement down.
Many of those counties have barely had even a whiff of economic improvement. And the possibility of $4-a-gallon gas means any recovery in those places could be stalled for some time.
Dante Chinni is the director of Patchwork Nation.