Gas Crisis Cities - Some households spend extra $2,000 or more this year

[Ming]

Gas Crisis Cities
Sara Clemence
Atlanta households might have to spend an extra $2,400 on gasoline this year
10/2/2005
www.forbes.com

Birmingham, Ala.
Price of gas on Sept. 16, 2004 (per gallon) $1.75
Price of gas on Sept. 16, 2005 (per gallon) $2.93
Miles driven per day (average) 65
2004 median household income (after tax) $40,955
Annual gas cost increase for two drivers $2,420
Gas cost increase as a percentage of household income 5.91%

The trip between Birmingham, Ala., and Atlanta is a nearly straight shot east on Interstate 20. An easy drive that, at around 150 miles, has recently become harder on the wallet.

"I delayed a trip to Atlanta until I could accomplish two things over there instead of one," says Carl Carter, president of Carter-Harwell Public Relations in Birmingham. Carter's family has four cars on the road. Though the vehicles are small, recent increases in gas prices "sting a little bit," and have caused the Carters to conserve somewhat, he says.

No part of the country has been spared the rise in gasoline costs, which increased to more than $3 per gallon over Labor Day weekend, in the wake of Hurricane Katrina. Since then prices have dropped slightly, but with nearly a quarter of the nation's oil refineries idle because of Hurricanes Katrina and Rita, on Wednesday the average price of a gallon of regular unleaded gasoline was still $2.81, according to the American Automobile Association (AAA). That's up nearly 48% from a year ago.

Though everyone is feeling the effects, some U.S. cities are being hit harder than others--not just because gas prices have risen higher, but because residents tend to drive more and incomes tend to be lower, magnifying the price increase.

Southern cities, including Birmingham and Atlanta, are taking a particularly hard whack, according to an analysis by Sperling's Best Places, a Portland, Ore.-based data firm.

In Birmingham, Sperling's estimates that this year, the average family with two commuters could spend $2,400 more on gas than they did last year. That's an increase of nearly 6% of the total median household income after taxes. And again, this is not the amount spent on gas, but the additional cost due to price increases.



"The impact in Birmingham is tremendous because we're so dependent on our automobiles," says Dr. Robert Robicheaux, chairman of the marketing and industrial distribution department at the University of Alabama at Birmingham.

Take a local household with the median income, which last year was about $41,000 after taxes for a two-earner family. There may be as little as $300 to $400 per month in discretionary income (money that is not earmarked for housing, food or other necessities), he says.

"When gasoline goes up $1.25 or $1.50 per gallon, to most folks that's a pain in the rear end," Robicheaux says. "But for people who are really pressed like that, it takes away a significant portion of their discretionary spending power."

The city has been providing carpool incentives and park-and-ride bus systems, he points out, but it's tough to change driver behavior. Fuel-wasting traffic, exacerbated by the fact that Birmingham only has a couple of major roads connecting downtown with the suburbs, doesn't help, he adds.

In Atlanta and Nashville, which also made our list of the ten hardest hit cities, a household might have to spend an extra $2,300 on gasoline this year. This Monday and Tuesday, at Gov. Sonny Perdue's urging, nearly every school district in Georgia kept schools closed in order to conserve gasoline.

Full Article Source: http://www.forbes.com/realestate/200...30home_ls.html

Also See List of Hardest Hit Cities: http://www.bestplaces.net/docs/studi...ices_list.aspx

Also See: http://www.walb.com/Global/story.asp?S=3922040&nav=5kZQ

[vdoh182]

I doubt both cars in the average household are driven 65 miles a day, maybe if one of them commutes to far they will see 65 miles day (i think my dad does about 100) but then i seriously doubt both people drive 65 mpg.

[Buick61]

I just checked. And since I got the car a week ago, I've averaged about 74 miles per day. Yet, I've only driven the car for three out of the 7 days. I just happened to take a semi-long trip. So yeah, 65 miles a day is very doable.

[Ming]

I drive about 40-60 miles per day back and forth to work, lunch, errands. With a couple of DINKs, this is very likely in many parts of the country where you don't live close to a city or commute on public transportation. And I guess with "Day Care Parents" that apparently is the trend these days that is the case, too.

Even if it were only half of that cost, at $1000 dollars per household - that's a generous Christmas budget for a large family, or a trip to Cancun.

It's possibly the worst for people who live in places that get bitterly cold in the Winter and have seen a steep increase in gas prices, since they will see their heating oil bills go through the roof as well.

[dindak]

Thankfully, I take a commuter train to work. I have noticed it's getting a bit busier lately though.

[01cavalier]

My commute right now is about 35 miles total a day, at one point in Phoenix, I was driving 150 miles, at gas prices now, I would take an issue with all that.

[Buick61]

My commute is 4 miles. Round trip.

[vanshmack]

I commute 93 miles each way for work, so $3.00/gallon gas really hurts, even with a car that gets 35 MPG. One good thing is, my wife and I carpool, so at least we're not multiplying the gas by two cars.

[plane]

Originally Posted by vanshmack

I commute 93 miles each way for work, so $3.00/gallon gas really hurts, even with a car that gets 35 MPG. One good thing is, my wife and I carpool, so at least we're not multiplying the gas by two cars.

How do you like the QC? Would you recommend it to others?

[Buick61]

Originally Posted by vanshmack

I commute 93 miles each way for work, so $3.00/gallon gas really hurts, even with a car that gets 35 MPG. One good thing is, my wife and I carpool, so at least we're not multiplying the gas by two cars.

That's FAR! What's the motivation?

[Parkwood60]

http://www.inflationdata.com/inflati...ices_Chart.asp
http://www.inflationdata.com/inflati..._Inflation.asp

Okay, now I only looked at one source for this, so other economist may say otherwise, but gas prices aren't really that high. Link one, inflation adjusted monthly crude oil prices shows that we are at about half what we were paying for crude back in 1980, and still below what we paid from 1979-1984.

Link two, inflation adjusted yearly average gas prices per gallon (with a big black dot showing out current spike due to the hurricanes), show we are paying about the highest we have ever paid, but it's a temporary peak. When averaged out over the whole year we are likely to be still paying less than we were from 1979-1986.

[vanshmack]

Originally Posted by plane

How do you like the QC? Would you recommend it to others?

Hey, my wife is a Wazzu Alum!

Great car, though if we were to buy a 2006, we'd get the 2.4 Ecotec. The 2.2 has some zip and great mileage, but I'm sure another 30 HP would be a lot more fun.

As for the rest of the car, we've had no problems. I think Ion still gets a unfair shake, even though the cheap interior of the 2003 car has been thoroughly upgraded with better materials for 2005. We cross-shopped against the Cobalt and felt that the Ion was a more substantial car.

Needless to say, we recommend it!

[moman]

I'm with Buick61, my commute is also 4 miles round trip. Add 3 miles on for lunch daily. If I was going only to work and back, a tank of gas should last me 3 weeks.

[vanshmack]

Originally Posted by Buick61

That's FAR! What's the motivation?

It was the alternative to moving to Oregon, at least for the next 3 years. With the price of a decent home in the Los Angeles area hovering around $600,000, we moved to the mountains North of LA. We got a beautiful brand new home on 1/4 acres for about $275,000. The dowmside is a long commute. Fortunately, we don't encounter much traffic.

[Ming]

Link two, inflation adjusted yearly average gas prices per gallon (with a big black dot showing out current spike due to the hurricanes), show we are paying about the highest we have ever paid, but it's a temporary peak.

I'm no economist, but isn't inflation itself caused in part by higher fuel and energy prices? If so I'm not sure that chart would be very relevant. If gas prices are spiking and affecting the costs of all goods, then of course it will appear that gas prices are "following" the inflation trend, when in fact they could actually be LEADING it...

And no matter how its spun - good or bad - high or low - an extra thousand or two per family in America is nothing to scoff at.

On the bright side, GM does offer plenty of fuel efficient vehicles - whether or not the Suits choose to advertise them and whether they sell or not (and whether people conclude from their stereotypes of GM that the General does not have any such cars and go to import dealerships) is for time to decide.

The ads I've seen from GM seem to focus on "We have the best fuel economy in a Full-size SUV" --- that's great and all but it still reinforces the idea that GM focuses its attention on big SUVs, and people may just have stricken that type of vehicle from their buying list.

Instead GM should be touting the cars I listed, for instance, and changing impressions of GM so people go to a GM dealership with the intent not to get a hulking SUV with better fuel economy, but a truly fuel efficient car, wagon, or small ute.