Most Americans are acutely aware of the cost of a gallon of gasoline. We see the price on big signs every day. But that price is only part of the story. For many years there was been a rule of thumb that gasoline expenses accounted for approximately 4 percent of household income. That rule no longer holds. In August of 2011, when regular gas cost an average of $3.66 a gallon, gasoline accounted for 9 percent of US median income.
While gas costs have risen for everyone, they hit some states harder. States with lower incomes and a lot of land to cover feel prices very differently than densely populated, relatively wealthy states. When gas was about $4 in 2008, states with high incomes and some transportation options, like New York and Connecticut, channeled less than 8 percent of their incomes towards gas. Even California, with the highest gas prices in the country, only spent 10 percent. But Montanans saw gas taking up 19.3 percent of their median income. Mississippi residents, who need to drive more than twice as far every year as those of New York, lost 18.8 percent of their income to gasoline. By being forced to divert such a high percentage of their household budgets to gasoline, families in these states carry an enormous burden--an unofficial "tax"-- because of where they live. Residents of Washington DC, on the other hand, almost get a free ride.
Watching this graph also reveals that looking at prices, and paying them, doesn't really add up to understanding them. People struggle to pay for gas on a monthly basis, and sometimes even from tank to tank, but many of us haven't accepted that high gasoline prices are a reality. In part this has been encouraged by political leaders, who talk about high prices as the fault of speculators, oil companies, environmentalists, or OPEC, suggesting that the "real" price of oil is lower. But if you watch this animated graph of gas prices a few times it's clear there's been a general upward trend in gas prices, with a lot of volatility. The "real" gas price is a moving target; but psychologically, many of us haven't adjusted to the new reality.