The price of gasoline has risen to $3.815, according to AAA. Four dollar gas may only be a month away if crude oil stays above $105 and the Libyan conflict continues. There are also fears that the international oil crisis could worsen if political conflicts in Nigeria boil over into crude production operations which have been shuttered in the past by guerrillas.
Gas prices fluctuate sharply from state to state. Regular unleaded fuel costs $4.17 per gallon in Alabama, while the price is below $3.50 in other states. Part of the reason for these discrepancies is differing gas taxes and part has to do with the cost to transport fuel. Gas prices in and of themselves do not affect consumer spending. Fuel costs cannot be considered in a vacuum. A household with an annual income of $250,000 may not be bothered much by $5 gas. A household with an annual income of $35,000 could find that $3.50 gas is so expensive that cutbacks on other daily expenses are necessary to offset the cost of daily driving.
24/7 Wall St looked at factors that make gas more or less affordable by state. We examined the average price of gas, of course. However, we also considered other factors that make fuel affordable. These included a state’s median household income, unemployment levels, and the portion of people who live below the poverty line. A state with high gas prices, high unemployment, and low median income is likely to be one where consumer spending levels are threatened.
This analysis shows the extent to which the US economy cannot be viewed as a whole–an undifferentiated collection of 50 states. Some states on this list, like Alabama or West Virginia, could be tipped back into a local recession because of a combination of high gas prices and low wages.
Each of “The States Where People Can’t Afford Gas” has a different set of factors contributing to the effects of high fuel costs. However, most of what is said about Indiana could also be said about Kentucky. Gas prices cause people to postpone vacations and defer daily expenses. Construction companies will suspend some of their activities. Businesses that deliver goods to homes or other businesses will try to raise their prices to offset their costs of transportation. Some of the states on this list barely made it out of the recession, if they did at all. Some still have double digit unemployment and high poverty levels. The sharp rise in gas prices becomes more severe each day. This is something that a portion of the population simply cannot afford.