Gasoline. Sweet, glorious, beautiful gasoline. Liquid gold. The magic elixir. The source of life.

It might sound foolish, but is there any other precious commodity whose prices so drastically impact our daily lives?

It was the dizzying spike in fuel costs in the summer of 2008 -- when gas prices took a rocket ride to more than $4 per gallon -- that caused a profound shift in car buyers’ preferences and choices. That prompted consumers to stampede away from popular, gas-chugging SUVs in favor of smaller, more fuel-efficient models.

That, in turn, lit a fire under the carmakers to improve the fuel economy of their existing models as fast as they could and to push new, even more efficient models through the product pipeline as expeditiously as possible.

But given the volatility of oil prices (the cost of gas plummeted at the end of ’08, then gradually crept back up to the $3-per-gallon range by this past April) are we to believe prices will stay low or spike this year? Might an unforeseen global development – like political / military turmoil in an oil-producing nation, or the Gulf Coast being hit by a couple of severe hurricanes -- cause prices to spike again?

Or, will prices go up again when the economy recovers -- a prediction that economists have been making for months?

Most Vunerable States

StatePercent of Income (Dollar Amount)
Mississippi 6.22% ($1880.95)
Montana 5.88% ($2017.96)
Louisiana 5.26% ($1908.72)
Oklahoma 5.12% ($1830.77)
South Carolina 5.06% ($1638.98)
Kentucky 5.02% ($1583.50)
Texas 4.87% ($1818.89)
Maine 4.65% ($1700.66)
Georgia 4.64% ($1595.08)
Idaho 4.54% ($1467.33)

 

The answer: nobody knows for sure. That kind of volatility and unpredictability is what is so maddening.

A recent study describes, in detailed fashion, the direct economic impact that gas prices have on everyday Americans. It reveals how big the gulf is between the most vulnerable and least vulnerable states, in terms of what percentage of a car owner’s total income goes toward buying gas. If another gas price hike were to occur, it would only exacerbate that chasm.

According to the study, prepared by the consulting firm of David Gardiner & Associates on behalf of the Natural Resources Defense Council (NRDC), the 10 most vulnerable states (ranked from most to least vulnerable), are: Mississippi, Montana, Louisiana, Oklahoma, South Carolina, Kentucky, Texas, Maine, Georgia and Idaho.

Meanwhile, the 10 least vulnerable states (from most to least) are: Florida, Washington, Pennsylvania, New Jersey, Colorado, New Hampshire, Maryland, Massachusetts, New York, and Connecticut. (See the full report with a complete ranking of the states -- and the data for each state.)

According to the study, car owners in Mississippi spent more than 6 percent of their income on gasoline in ‘09, while citizens in Connecticut and New York spent only about 2.5 percent of their income on fuel. But if prices spiked again, Connecticut and New York drivers’ spending on gasoline would go up moderately, to around 4.3 percent; Mississippi drivers, on the other hand, could see their spending on gasoline skyrocket to more than 11 percent.

As one might expect, the NRDC is pushing hard for the federal government to enact new, bolder energy policies, and re-prioritize transportation spending, in order to combat the economic hardship caused by any potential price spikes, either in the short or long term. Specifically, in order to cut America’s dependence on oil and help reduce the risk of oil and gas price spikes, the report recommended that Congress:

1 - “Pass comprehensive climate and energy legislation that limits carbon dioxide emissions, helps us break our oil addiction, and helps create millions of clean energy jobs here in the United States; and

2 - “Fundamentally reform federal transportation policy to support smart, transit-oriented development; assist states and regions in saving oil; and provide ample funding for energy-efficient transportation alternatives including rail and bus lines, bike paths, sidewalks, and other alternatives to driving.”

“Our addiction to oil is harming us economically, both as a nation and as individuals, and any increase in gas prices would add to that burden,” said Deron Lovaas, NRDC’s transportation expert. “That’s why we feel strongly that Congress needs to put even more emphasis on clean energy and climate solutions, which would not only be better for the environment, but would also help the economy.

“We’re interested in ways to decrease the demand for oil, not increase the supply.”

Elizabeth Hogan, an analyst at David Gardiner & Associates and the co-author of the report, echoes those sentiments.

“It’s important that the federal government pushes for more efficient vehicles and alternative fuels that are cleaner, and that it focuses on better public transportation and smart growth,” said Hogan. “That would really help putting an end to this unhealthy addiction we have to oil. And this report will hopefully get the attention of Congressmen in the most vulnerable states, and let them know just how severely gas prices impact the people they represent.”