The Progressive Ensign

insights and analytics to build an economy that works for all

Category: Climate Change

High Gasoline Prices Hurt Low Income Consumers Most

 

Image: earthfinds.co.ug

OPEC nations have been reducing their oil output over the past few months, while the US has been increasing its output – to the point where the US has become a net oil exporting country.  Yet, with the US pulling out of the Iran Nuclear Agreement, oil prices shot up even higher.  For a regular gallon of gas, the price has increased 23 % over a year ago.

Source: gasprices.aaa.com – 5/15/18

Prices are highest in the Western states and East Coast where there are more environmental regulations requiring special gas additives and higher taxes for road maintenance. Major gasoline price rises anywhere hit the lowest income groups the hardest, yet even harder in expensive Western and East Coast states.

Sources: Bureau of Labor Statistics, Morgan Stanley Research, The Wall Street Journal, The Daily Shot – 5/15/18

Low income people are already squeezed by higher rents, fewer low cost homes to purchase, rising health care costs, higher health insurance for individuals by undermining the Obamacare exchanges, higher debt, low wages and longer commutes (as often they don’t have the money to live near work).  Longer commutes mean that a gasoline price increases hurt these long commuters harder than other drivers.

Next steps:

We need to get back to a focus on the 80 % and the lower income 10 – 20 % who are taking the brunt of price increases for necessities across our economy.  We need to invest in affordable housing near employment to reduce commutes (reduce as purchases), public transportation in rail, bus and tram systems.  While, reducing environment regulations may help the oil industry to pump more oil, we do so at the cost of our environment and health in the future – where quite often lower income people live near refineries and pollution leaking tank sites.  Investing in renewable energy sources to reduce our need for costly gas offers more alternatives and is an environmentally sound strategy. Plus, corporate employers could help hourly and lower salary workers with public transportation credits to be used to reduce expenses of driving by supporting car pools and using public transportation. Local and State government can offer tax deductions on the matching grants to corporations that offer public transportation and carpooling credits.

California Leads with Solar New Home Requirement

Photo: npr.org

The State of California is the first state in the country to require all new homes being built beginning in 2020 have solar panels.  The requirement applies to all single family and condo units up to three stories high.  The additional cost is estimated to be about $9, 500 added onto one of the highest median prices in the country at $565,000.

Some observers would have preferred that the State focus on building large solar farms rather than residences since the residence approach means that utilities have to deal with power coming up line that may be difficult for them to handle.  Yet, residence based solar panel electricity provides for a more distributed system, rather than a centralized one offering more redundancy, options for homeowners and great self-reliance.

The residence based electricity option basically poses an alternative to central line based power utilities.  Essentially with competition from residences it will spur utilities to cut costs and see how to move into renewable energy quicker to take advantage of lower costs for solar power.

Sources: California Energy Commission, The Wall Street Journal – 5/9/18

The shift to renewable energy sources is crucial to meet objects for climate change as endorsed by 175 countries in the Paris Climate Accord. When we think about the consequences of not meeting the challenge of climate change it is unthinkable how hostile our planet will be to live on – eventually making it uninhabitable.

We call for a national initiative to make renewables the standard for all new homes. As we have noted almost 60 % of the people want to set the environment as a priority even if there is an economic cost.  if the federal government won’t do it then the top 20  new housing states should implement the plan and make renewables as the de facto approach toward home building.

To assist first time buyers, we recommend the State of California offer for homes under $400k an energy credit to be used as a credit on families’ state taxes to help out with the added solar expense added onto the price of a new home.

Let’s get the country moving toward renewable energy as our standard way of building communities and enjoy a climate that we all can live in.

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