The US is set to spend $100 billion more than it did in 2010 despite declining gas consumption. And the people who are affected the most are those, naturally, who are least able to bear the cost.
The problem, as with financial services, is that the energy industry has accumulated outsize profits which enable it to invest in the preservation of its own advantage. Despite the fact that even well-regarded members of the oil fraternity are predicting that 'peak oil,' the apogee of theoretical energy resource extraction, has been passed, policy makers continue to tiptoe around the need for more aggressive alternative energy investment.
In an era fraught with deep suspicion of government (to the creation of said perception the aforementioned industry has, again, contributed financially and philosophically)there are few viable public policy solutions. One suspects, however, that as other businesses bump up against the limits of their own ability to moderate the impact of such costs or transfer them to customers, that countervailing pressure will begin to be felt. JL
Andrew Price reports in Fast Company:
If you have to commute to work, and don’t live in an area with good public transportation, there’s not much you can do when gas prices rise except bite the bullet and pay more. With unemployment hovering around 9% and middle-class incomes stagnant, few people can afford an electric car or get a new job closer to home. The result? Low- and middle-income Americans are finding themselves spending an ever larger percentage of their income on gas, even as they have less money to spare.
By the end of 2011, Americans will have spent more than $490 billion on gas--more than in any previous year and $100 billion more than in 2010--despite a projected decline in gas consumption. That’s the frustrating conclusion of a new report from the New America Foundation called The Price-Induced Energy Trap: Exploring the Impacts of Transportation Expenditures on the American Economy.
Most shocking, however, is how this "energy trap" affects low- and middle-income families who live in rural areas where there aren’t alternatives to driving. In 2008, when gas prices shot up to roughly $4 per gallon, residents in big cities could adjust by taking public transportation. But in Montana, gas ate up 19.3% of the median income. In Mississippi it was 18.8%.
High unemployment can make the energy trap worse, because people are forced to drive more to find work. Darren, in the video below, spends a full 51% of his income on gas and other car-related expenses now that he works two jobs.
According to the report, families that are squeezed especially hard by transportation costs find themselves with less money for things like medicine and education, which sets them up for even more economic hardship later on.
So what’s the solution? The report’s authors recommend expanding bus service, giving people low-interest loans to buy fuel-efficient cars, and making it easier for entrepreneurs to enter the transportation market.
But eventually, we’re going to need to somehow break the gas habit for good.
1 comments:
Thanks for the insights once again, Jon. I couldn't agree more. In rural areas near me, the rising cost of pickup-truck-dependent living is pretty clearly a contributor to deepening poverty and the spread of meth and mayhem. It's bad enough to see jobs go, but to see living costs climb so dramatically at the same time is a crushing blow to many.
The hell of it is, this also entrenches opposition to regulations that might encourage a switch to other energy sources, because everyone is completely fixated on the desire to return to cheaper gas, as if that alone will restore better times.
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