PATCHWORK NATION -- March 30, 2012 at 9:49 AM ET
Higher Gas Prices: the Varied Impact Across Patchwork Nation
Photo by Paul Thomas/Bloomberg via Getty Images.
No one likes paying more for anything, but there's something special about gasoline. It's a price increase that's very hard to avoid, and it's directly tied to one of the nation’s central tenets: the ability to move freely across the city or across the country.
Lately, as pump prices have climbed — and climbed — voters have begun to express their frustration even if they aren’t exactly sure where to aim their anger. And, of course, politicians have stepped forward with ideas about whom to blame.
But aside from the psychological damage from rising gas prices, what are the real economic impacts? You can look at national figures, as The New York Times did recently in a smart story in which it found the impact was ultimately fairly small — or at least not nearly as big as consumers make it out to be. Gas and motor oil expenditures work out to 4.4 percent of all spending done by the average American annually — less than half of what the average American spends on restaurants and entertainment.
Averages are not the whole story, however. Other factors come into play when you consider the impact of higher gas prices, and where you live is a key component. The map below shows March averages as compiled by GasBuddy.com.
Some of the biggest differences in Patchwork Nation’s 12 county types are how much driving people have to do, how much petroleum-based fuel they have to use in their daily lives and, of course, how much they earn in household income. Add those three things together and you get a very different look at the increase in gas prices.
MAKING THE TRACTORS GO
Looking at the rise in gas prices in the 12 county types, the uniformity is noticeable. It has generally been up around 35-cents-a-gallon across the board over the past two months &mdash even higher in a few places. But the impact of those hikes can be very different depending on the community from which you are viewing them.
Average Gas Price Increases by Community Type
|Community Type||January Average||March Average|
|Campus and Careers||$3.24||$3.60|
|Service Worker Centers||$3.33||$3.69|
In rural America, for instance, there aren’t a lot of alternatives to driving. Options available for public transit are generally extremely limited, if there are any at all. And longer drives are often needed to shop or run errands. On top of that, there are the vehicles people drive.
In urban settings, people who often drive sport utility vehicles or pickup trucks because they like the look or the image. But travel to a Tractor Country community like Sioux Center, Iowa, and owning a truck is more of a need for the work that must be done, from using the flatbed to hauling a trailer.
What kinds of difference does that make? Consider that those types of vehicles, classified as light-duty long-wheelbase by the Census Bureau, on average get six fewer miles per gallon than standard vehicles — 17.4 mpg versus 23.8. The significance of that difference can add up quickly when you figure in lots of miles while hauling a load.
And that, of course, is not also adding in the cost of fueling farm machinery, which can be quite high — their fuel economy is not measured the same way and depends greatly on the model and what the machinery is doing. Some of those costs get passed on to consumers, of course, but probably not all of them.
Then consider the difference in income. The median household income in Tractor Country counties is only about $33,000 — the national median household income is about $50,000. Add an extra $1,000 or so in fuel costs, about $19 a week, to that lower income level and you begin to see the gas price problem differently.
OTHER RURAL CHALLENGES
And it’s not only Tractor Country that suffers a tougher fate with higher gas prices. Other more-remote, lower-income community types have similar problems, though without the strong agricultural element. The Evangelical Epicenters, Minority Central and the Service Worker Center counties are examples.
And for some of the Service Worker Centers, the rise in gas prices could hit them with a double whammy — not only at the pump but in the local economies as tourism season begins.
Many of the Service Worker communities have strong tourist economies, as we have noted in other reporting, from the coast of Maine to the shores of inland lakes in the Midwest.
Lincoln City, Ore., which Patchwork Nation has been visiting for four years now, relies heavily on overnight stays from tourists who come to walk along the beach and be near the Pacific Ocean. They fill the city’s 3,300 hotel rooms on nice weekends, eat in the restaurants and shop at the local businesses.
But the vast majority of the tourists come by car. If gas prices rise too much they could either decide not to come at all or, if they do come, simply spend less. Places like this have been struggling since the beginning of the recession as people trim non-essential spending.
Does all this mean the increase in gas prices is going to destroy the U.S. economy or that the political blame game on gas prices is warranted? No. But it means the problems the hike in gas prices cause are complicated and how you experience and understand them has something to do with where you live.