Why A Gas Price Spike Could Hit Some States Harder Than Others

March 17, 2010
Gas At $4.89

Gas At $4.89

A surge to $4-a-gallon gas could affect drivers, and local economies, in much more severe ways in Mississippi or Louisiana than in New York or Connecticut.

That's one of the results of a new analysis from the Natural Resources Defense Council (NRDC), which crunches the numbers to point out how much more vulnerable some states are than others to price spikes, figuring in per-capita income and how much of it is spent on fuel.

As we reported last week, $3-a-gallon gas, on a national average, is predicted again later this spring and into the summer. Though much higher prices aren't anticipated it's still quite possible that if anything happened to disrupt refinery operation or our foreign-oil-dependent supply chain, another $4 price spike could happen.

Mississippi's gas prices have been consistently well below those of New York or Connecticut and rank among the lowest in the country. But Mississippi could hurt the most from a price hike as it has one of the lowest per-capita and household income levels in the country and was in the lowest 20 percent of states for personal-income growth as of mid-2009.

Based on current 2009 gas-price numbers, Mississippi drivers are spending more than six percent of their income, on average on gas, while Connecticut drivers barely spend 2.5 percent.

The NRDC looked at the total amount of motor gasoline used, the average price in that state, and the number of licensed drivers, then considered per-capita income to find the percentage of income that goes to fueling up.

First, the NRDC considered average prices in 2009, when pump prices had remained quite steady and low. It found that Mississippi, Montana, Louisiana, Oklahoma, and South Carolina drivers had spent the largest percentage of their income on gasoline, while Connecticut, New York, Massachusetts, Maryland, and New Hampshire drivers spent the least. For an idea on the range, Connecticut drivers spent 2.52 percent of their income (about $1,391), on average, on gasoline, while Mississippi drivers spent 6.22 percent, or about $1,881 annually.

2010 Toyota Sequoia

2010 Toyota Sequoia

2010 Toyota Prius

2010 Toyota Prius

Then, the organization ran those numbers again, looking at state-average gas prices from July 2008, when prices peaked. Again examining how each state would be affected, it found that Mississippi would be hit hardest if prices spiked again, followed by Montana, Louisiana, Oklahoma, and South Carolina. Kentucky, Texas, Arkansas, and Georgia rounded out the top ten.

Mississippi and Montana drivers were both predicted to spend more than ten percent of their income on gasoline during a sustained price spike while New York, Connecticut, and Massachusetts drivers would still be under the five-percent mark.

The point? That those who are just struggling to get by now won't be able to sustain their lifestyle at all if gasoline prices spike while the affects of the recession persist.

If you're not sure if you can weather the next storm, it might be worthwhile to crunch out how much you're spending on gasoline—possibly by checking out estimated Annual Fuel Cost figures at the federal government's FuelEconomy.gov site. For instance, a new 2010 Toyota Sequoia costs $2,791 per year, given an estimated 15,000 miles of driving, while a 2010 Toyota Prius costs just $837. Listings for previous model years are there as well.

NRDC, which points out that the U.S. currently imports more than two thirds of our crude oil supply from abroad, and 96 percent of out transportation system is reliant on oil, used the results to rally for legislative action from Congress, more promotion of fuel-efficient vehicles, clean fuels, and smart growth through local and state governments, and federal transportation reform that includes transportation alternatives.

The results serve to emphasize that in those states where drivers already spend a disproportionately large amount of their income on gasoline, price spikes are going to affect struggling Americans (and their local economies) a lot harder.

"Drivers in many states are hurting," the group asserts, "and if gasoline prices spike again, they will be hurting even more."

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