3.29.22 11:20 – Clarification: We have updated a statement in this article about an informal Instagram poll of Shasta Scout readers to ensure that readers understand the limitations of the survey.
Between the end of February and mid-March, gas prices have increased about 20% in California.
How Do Rising Gas Costs Affect Shasta County?
A March 2022 Public Policy Institute of California (PPIC) survey that included Shasta County residents, indicates that recent price increases, including the price of gas, have significantly impacted lower-income Californians.
That data shows that Californians on average spend about 4 percent of their income on fuel for their cars and homes, but that increases to 16 percent for those with the lowest incomes, for whom a $20-per-week increase in gasoline prices is more likely to take money from other necessary budget items such as food or housing.
In Shasta County, according to the U.S. Census, the per capita income is roughly $31,000 and more than 13 percent of the population lives in poverty. That puts Shasta County’s population at a disadvantage compared to the rest of the state, where per capita income hovers around $39,000 with an 11.5 percent poverty rate.
The U.S. Census defines living in poverty as having income levels that do not meet the basic threshold needed to pay for the cost of living. The impacts of rising gas costs are most likely to be felt by those on a fixed income, including seniors and those living on disability payments.
Shasta County residents may face additional disadvantages due to the large size of the county and the demands of rural lifestyles, which require many residents to drive more miles to work, school, and other activities.
In a recent poll of Shasta Scout’s Instagram audience that included about 60 respondents, 34 percent said that current gas prices are creating a “big impact” in their life. And 67 percent said they’ve changed their driving habits in response to rising gas prices. Those poll results provide one metric of how gas prices are effecting locals, but it’s important to note that the informal survey was not designed to provide a scientifically accurate measurement of Shasta County residents attitudes towards gas prices.
What’s Causing Rising Gas Costs?
While a number of complex factors are contributing to high gas prices in California and across the United States, the single biggest factor is concern about the global supply of oil, driven by a recent U.S. ban on the import of Russian oil. The ban on Russian oil imports, which received bipartisan support in Congress, is intended to “target the main artery of the Russian economy,” in response to the invasion of Ukraine, according to President Biden.
Announcing the ban, Biden told Americans that defending freedoms abroad would “cost us here at home.”
The decision to ban Russian oil imports was a reflection of the United States’ relatively strong energy independence in comparison to our allies in Europe, allowing the U.S. to ban Russian imports without with fewer economic effects.
The PPIC notes that while only 4 percent of U.S. oil imports come from Russia, oil prices are determined on a global scale and Russia supplies roughly 11 percent of global oil. Additional contributing factors to the current price of gas in the U.S. include the COVID-19 pandemic, sanctions on Iran, and changes in Mexican and Venezuelan gas industry policies, as well as conflict in Africa and the Middle East.
How Are U.S. Gas Prices Regulated and What Can the State and Federal Government Do?
There are no real federal laws or regulations that determine the price of oil or gas. The price of American gas is significantly dependent on the global price of crude oil. That price goes up when demand increases, when supply decreases, or when people believe there could be a drop in future supply.
For many, the most obvious solution to rising gas prices driven by a ban on foreign imports is to increase the supply of oil at home, making America more energy independent. Oil companies say the federal government can do that by lifting environmental regulations to allow for more drilling and fracking permits. But others say that lifting regulations would not increase domestic supply, claiming supply limitations are mostly driven by the decisions of oil producers not to utilize existing land leases, in an effort to increase returns to shareholders.
California’s high gas prices include the cost of taxes and climate regulation programs, which together, added about $1.27 to the cost of gas in February, according to reporting by the New York Times.
Plans abound for ways Californians can reduce soaring gas prices, which are the highest in the nation. The latest iteration is a March 23 plan by Governor Newsom which would designate $9 billion to address the impacts of rising gas prices by giving to Californians $400 per registered vehicle (for up to two vehicles), as well as designating grant funding to make public transportation free for three months. Rebate checks would not likely arrive until at least July, after the state adopts their new fiscal budget.
Some California Democrats feel that Newsom’s plan doesn’t do enough to address the way rising gas prices more seriously affect lower-income people. And California Republicans are pushing for a reduction in the gas tax, which is the second highest in the nation at 51 cents per gallon. A reduction in the gas tax has the advantage of being relatively fast and easy, but opponents argue that the savings in taxes would go back to oil suppliers and is not guaranteed to reduce gas prices at the pump.
According to reporting from CalMatters, reducing taxes on gas and sending out checks to Californians have the same goal of providing financial relief but very different impacts on climate. By sending out checks, rather than reducing gas taxes, the state is likely to encourage continued changes in driving habits driven by high gas prices. With money in hand, Californians, like many in Shasta County can continue to alter their driving habits to save on gas, while utilizing government funds for other high need life expenses, benefitting the planet and their budget.
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