Bane of the Middle Class: Rising Gas Prices

Posted by: Irvin Dawid
Thanks to: John Hartz

25 October 2011 - 11:00am

In this Washington Post blog, Brad Plumer writes on a New American Foundation report on rising gas prices and their disproportionate impact on the poor and middle class. Public policies intended to reduce fuel consumption, however, benefit the rich.

A person of modest means is more likely to buy a used car than a new, fuel-efficient car, much less an even more costly new all electric vehicle, despite the $7,500 federal credit. In fact, when fuel prices rise, the used car market is flooded with cheap SUVs while compact cars are grow pricier and fewer. Yet subsidies and regulations predominantly aim to reduce fuel consumption from wealthier motorists, according to New American Foundation's newly released working paper, The Price-Induced Energy Trap (PDF).

The benefit of higher fuel prices in reducing fuel consumption
pales in comparison to the much larger expenditures in transportation resulting from the price increase notwithstanding some modal switch to transit, cycling, or commuting from home.

“In 2011, as gas prices have risen, Americans have cut back on fuel consumption by about 1.8 percent.” However, “overall gas expenditures still rose 25 percent over the past year, or $102 billion. That essentially wiped out all of the benefits from President Obama’s middle-class tax cut.”

New American Foundation's Director of Energy Policy Initiative "Lisa Margonelli laid out the basic situation. Right now, the average family of four spends more on transportation than on health care and taxes combined."

From The Price-Induced Energy Trap: "Despite an anticipated 1.8 percent decline this year in gasoline consumption, for example, the overall expenditures for gasoline will increase 25 percent...Better understanding why very high gasoline prices do not lead to dramatic reductions in gasoline consumption could lead to policies that more quickly, and less painfully, reduce gasoline demand and consumer spending."

Full Story: How gas prices are killing the middle class

Source: The Washington Post - Blogs, October 21, 2011

link

Submitted by johndecember on Tue, 10/25/2011 - 19:33.

The link to the article is: http://www.washingtonpost.com/blogs/ezra-klein/post/can-we-stop-gas-pric...

thanks for posting correct link, John!

Submitted by Irvin Dawid on Thu, 10/27/2011 - 16:18.

Irvin Dawid, Palo Alto, CA

Cheap gas=suburban sprawl, oil wars, global warming

Submitted by baycityroller1 on Tue, 10/25/2011 - 12:03.

How many times do we have to go over this? Americans, especially liberals critical of government and corporate policies, cannot demand cheap gas and then turn around and demand an end to suburban sprawl, Mideast oil wars and global warming. It's one, or the other. Personally, I want the price of gas to be higher, which will not only help heal the environment and ease Mideast tensions, but will also limit the ability of the middle class and the poor to live suburban, car-dependent lifestyles they can't really afford. This, in turn, will increase demand for dense, urban, walkable, transit-rich development, while those who can afford cars and suburban McMansions can have them, too...for a price...the price being that they will have to pay more at the pump for gas.

Choices and where to live.

Submitted by Dano on Wed, 10/26/2011 - 10:22.

Personally, I want the price of gas to be higher, which will not only help heal the environment and ease Mideast tensions, but will also limit the ability of the middle class and the poor to live suburban, car-dependent lifestyles they can't really afford. This, in turn, will increase demand for dense, urban, walkable, transit-rich development,

I think gas is far too cheap and too heavily subsidized, but I don't want to limit the ability of the bottom three quintiles to live their lives, especially in places they don't want to live. Sadly, their choices are becoming more limited, not less.

Best,

Context

Submitted by baycityroller1 on Wed, 10/26/2011 - 20:45.

You're taking my statement out of context.

It isn't limiting anyone's freedom to end government subsidies for lifestyles they can't afford.

It will liberate them to understand the true cost of gas and to embrace city planning concepts and transportation modes that get them out of the suburbs and out of their cars, which will be of immeasurable benefit as they prosper from their newly affordable lifestyle.

As for those who can afford a costly, car-dependent, suburban lifestyle, it is also no limit on their freedom to ask that pay their fair share for it.

More Context.

Submitted by Dano on Thu, 10/27/2011 - 11:45.

I specifically italicized limit the ability. Surely you want to send clear signals so folks can make good decisions rather than wanting to limit their abilities. Paying true costs is an example of clear signals and is a much better frame for what they can do, rather than saying what they can't do.

As I wrote, I think gas is way too cheap. This prevents good decision-making as it masks true costs.

Best,

I think I see what you mean.

Submitted by baycityroller1 on Thu, 10/27/2011 - 12:15.

I think I see what you mean. I don't want to alienate anyone with language that states their options will be limited. I probably should have said, "Higher gas prices will help the middle class and the poor avoid a lifestyle they can't really afford."

Or even, "Higher gas prices will encourage city planning and transportation modes that will benefit the middle class and poor by giving them options they can afford."

Is that better?