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 besides bite the bullet and pay more. With unemployment hovering around 9 percent and middle-class incomes stagnant, few people can buy 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.
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
According to the report, 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.
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 get off gas somehow.