Rising gas prices affect a lot!

On your way to work this morning, or possibly to somewhere else to conduct your daily business or errands, take a look at the signs being proudly displayed at any business selling gasoline. What do you see, other than a price that continues to climb. The reason for these rising prices, $3.45 in my area and much higher in others, is a simple one, while at the same time as complex as anything you may ponder. Unrest in the Middle East is threatening the supply and flow of oil, so the automatic, knee-jerk reaction is for the price to go up. Excuses we have heard before include hurricanes in the Gulf of Mexico and damage to refineries in Texas and Louisiana. Obviously, the rising price of oil, over $101 per barrel this morning, precedes the rising price of gasoline, so as the first goes up, so follows the latter. It has been that way for years, but it seems to me that the price of gasoline is more volatile than ever before. The cause for that lies directly at the feet of the energy policy of the United States government.

The U.S. Energy Information Administration is projecting that the average retail price of regular-grade motor gasoline will increase from $2.78 per gallon in 2010 to $3.70 per gallon in 2011 and to $3.80 per gallon in 2012, hitting a high of $4 this summer.

How will this hit the pocketbook of the average American household? According to the U.S. Department of Transportation and EIA, the average U.S. household purchases a little over 1,100 gallons of gasoline per year. Therefore, when there is a sustained rise in the cost of gasoline by $1, the average American household spends an additional $1,100 annually.

In 2009, the median household income in Kentucky was $41,197. At $3 per gallon the typical Kentucky household would spend about 8 percent of its annual income on gasoline. At $4 per gallon the percentage rises to 10.7 percent.

In 2009, the median household income in Ohio was $47,144. At $3 per gallon the typical Ohio household would spend about 7 percent of its annual income on gasoline. At $4 per gallon the percentage rises to
9.3 percent.

In 2009, the median household income in Indiana was $47,465. At $3 per gallon the typical Indiana household would spend about 7 percent of its annual income on gasoline. At $4 per gallon the percentage rises to 9.3 percent.