The States Where People Can't Afford Gas

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.

10. Iowa
> Median Income: $50,721 (21st highest)
> Regular Gas Price: $3.94 (8th highest)
> Unemployment: 6.1% (6th lowest)
> Population Below Poverty Line: 13.07% (16th lowest)

High gas prices are causing fiscal pain across Iowa, which has the eighth-highest gas prices in the country.  One sector which is having trouble dealing with these rising prices is Iowa’s school districts.  Governor Terry Branstad announced projections of 0% spending growth for all Iowan schools for the next two years, yet the schools cannot avoid spending more money for fuel.  “We’re at the mercy of the market whenever we purchase,” said Bill Good, chief operations officer of the Des Moines School District, reported by Des Moines station KCCI, meaning cuts must come from elsewhere.

9. Ohio
> Median Income: $45,879 (19th lowest)
> Regular Gas Price: $3.83 (17th lowest)
> Unemployment: 9.2% (20th highest)
> Population Below Poverty Line: 19% (16th highest)

Gas prices in Ohio are not only affecting drivers, but also the state’s industries which rely heavily on transportation and other gas-related services.  One local news station notes that farmers are taking a large hit.  This is due to the unavoidable use of farming equipment, as well as the rising costs of supplies such as fertilizer.

8. North Dakota
> Median Income: $50,075 (23rd highest)
> Regular Gas Price: $3.97 (7th highest)
> Unemployment: 3.7% (lowest)
> Population Below Poverty Line: 12.77% (15th lowest)

North Dakota has the seventh-highest average gas prices in the country, at $3.97 a gallon.  This is up 12.8 cents from March.  Quoted by Bismarck television station KFYR, director of the North Dakota Tourism Division Sara Otte Coleman said that “an increase in gas prices is gonna hurt people`s discretionary income in general.”  The state’s tourism industry may suffer this summer as a result of fuel prices.

7. Florida
> Median Income: $45,631 (15th lowest)
> Regular Gas Price: $3.82 (18th lowest)
> Unemployment: 11.5% (2nd highest)
> Population Below Poverty Line: 18.17% (18th highest)

The combination of high gas prices and a relatively low median income is going to hurt Florida impoverished.  The state’s average gas price is $3.82, which is the eighteenth-highest in the country, and its median income is $45,631, the fifteenth-lowest amount. Additionally, the state has the third-highest unemployment rate in the country – 11.5%.  Those who are looking for work or have low incomes are being hurt the most by gas prices.  Others have turned to hybrid cars as the solution to their problems.  A southwest Florida news station notes that hybrid cars have begun selling so quickly that there have been unexpected shortages in the state.

6. Kentucky
> Median Income: $42,664 (8th lowest)
> Regular Gas Price: $3.80 (21st lowest)
> Unemployment: 10.4% (6th highest)
> Population Below Poverty Line: 22.67% (3rd highest)

Kentucky has the ninth-lowest median income in the country, the sixth-highest unemployment rate, and the third-highest percentage of its population living below the poverty line.  The national average for the increase in gas prices from last year is 28%.  Gas prices in Kentucky, however, have increased 34% from last year.  Gas prices have also caused food prices to increase by 5.2% in the past three months, the highest quarterly increase in the past three years, according to the Kentucky Farm Bureau.

5. Michigan
> Median Income: $45,994 (20th lowest)
> Regular Gas Price: $3.94 (9th highest)
> Unemployment: 10.4% (6th highest)
> Population Below Poverty Line: 19.07% (15th highest)

Gas prices in Michigan are the ninth-highest in the country, which may further hurt the state’s unemployment rate, which is already the country’s sixth-highest. One industry being affected is the construction industry, which is struggling with the rising costs of material.  Quoted by local northern Michigan TV news broadcast 9&10 News, Mike Ferraro, the President of Ferraro Builders Inc, said “We have to pass that along to some extent and the difficulty is determining how much of this increase expenses we can pas so to the consumer versus how much we’re able to essentially absorb.”

4. North Carolina
> Median Income: $41,906 (8th lowest)
> Regular Gas Price: $3.89 (11th highest)
> Unemployment: 9.7% (12th highest)
> Population Below Poverty Line: 20% (13th highest)

North Carolina has the eleventh-highest gas prices in the country.  It also has the eighth-lowest median income.  Those who make less money are being affected by gas prices in a number of ways.  One North Carolina news source refers to a man who has begun working twelve-hour work days to pay for the gas he uses to commute to his job.  Extra curricular or leisure activities may also be abandoned, as more money is spent on fuel.

3. West Virginia
> Median Income: $40,490 (5th lowest)
> Regular Gas Price: $3.88 (12th highest)
> Unemployment: 9.4% (16th highest)
> Population Below Poverty Line: 22.07% (5th highest)

West Virgina has the fifth-lowest median income in the country, as well as the fifth-greatest percentage of its population below the poverty line.  Quoted in the Parkersburg  News And Sentinel, Wayne Waldeck, the chief executive officer at Wal-bon Corp.,which is the owner of a local pizza restaurant, said that he spends “thousands of dollars a week on gasoline for [his] delivery trucks.”  He then noted that amount is getting worse.  This sort of problem is occurring across the state, and delivery charges are being increased in response, passing further costs onto consumers.

2. Indiana
> Median Income: $44,305 (12th lowest)
> Regular Gas Price: $4.04 (4th highest)
> Unemployment: 8.8% (24th highest)
> Population Below Poverty Line: 17.57% (20th highest)

Indiana currently has the fourth-highest gas prices in the country.  It is the first time since 2008 that gas prices have passed an average of $4 per gallon.  One way in which people have reacted is by staging a boycott of buying gasoline for one day.  Quoted in The Star Press, Greg Seiter of AAA Hoosier Motor Club said, “If past experiences are any indication, the $4 mark tends to move people in ways that other price levels don’t…you’re going to notice people cutting back on driving, sharing rides, shopping aggressively for gas prices and doing everything they can to save themselves a little money.”

1. Alabama
> Median Income: $39,980 (3rd lowest)
> Regular Gas Price: $4.17 (3rd highest)
> Unemployment: 9.3% (18th highest)
> Population Below Poverty Line: 21.77% (6th highest)

Alabama has the third-highest gas prices in the country and the third-lowest median income.  Just under 22% of the state’s population is also living below the poverty line.  This is the sixth-greatest amount among the states.  Many of those living on the Gulf Coast have complained that these prices are coming just one year after the major BP oil spill disrupted their lives.  Tourism spots which were closed by the Deepwater Horizon disaster will now have to handle the drop in tourist traffic due to gasoline prices.

Douglas A. McIntyre & Charles B. Stockdale