The Most Oil-Addicted States

As policymakers in Washington (D.C.) continue their myopic struggle with gasoline prices (as Tom Friedman says , we don't have a "gasoline price problem," we have an addiction problem), a few of us at NRDC, along with our friends at David Gardiner and Associates and Rebecca Schlesinger Henson at Calvert Asset Management Company studied state vulnerability to prices as well as the policy response by state officials. The result is our second annual report that ranks states based on these two categories (vulnerability and policy solutions), and is available on our web site here [1].

First, we looked at state vulnerability. This ranking is based on the percentage of driver income spent on gasoline (including state taxes, an improvement over last year’s report). There are substantial variations. At one extreme Connecticut drivers spent about three percent of their income on gasoline while those in Mississippi spent about eight percent, based on 2007 data. Two things to remember about the ranking are that it understates the percentage being paid in the days of $4-a-gallon gasoline, and it is explained in part by differing incomes.

Here are the top ten most vulnerable states:

1. Mississippi
2. South Carolina
3. Georgia
4. Louisiana
5. Kentucky
6. New Mexico
7. Indiana
8. Arkansas
9. Oklahoma
10. Iowa

Differences aside, consumers in every state in the nation are getting hammered. And there is of course the multiple-whammy of turmoil in housing markets and increases in prices of various goods and services in part due to oil price hikes, since oil is all-pervasive in our economy. As the Center for Housing Policy found in a report < http://www.nhc.org/pdf/pub_heavy_load_10_06.pdf> a couple of years ago, transportation and housing costs alone chew up more than half the income of working families ($20,000-50,000 annual wages).

What is to be done? This is the subject of our second ranking, which focuses on policy solutions. We considered twelve policies, weighting them according to our judgment of effectiveness. The three policies that counted most were:

• California’s clean car rule, adopted in 2002, with 17 states following suit since then. This policy is aimed at cleaning up the air and reducing greenhouse gas emissions, but has the additional benefit of increasing the average fuel-efficiency of fleets where it’s adopted. And it raises the bar faster than federal fuel economy standards, providing more benefits for consumers in the era of $4 a gallon.
• California’s low-carbon fuel standard, adopted in 2007. This new technology-neutral performance standard would lower the carbon intensity by ten percent by 2020, and cut oil consumption by an estimated 20 percent to boot. States should follow California’s lead in this case too, and some (like Massachusetts) are seriously considering it.
• Washington state’s new program to cut per capita vehicle-miles-of-travel in half by 2050. New York has adopted a similar policy, and Rhode Island has applied the idea to its state employees. Slowing and cutting growth in auto traffic reduces pollution and oil use (not to mention congestion!).

The states at the top of our solutions ranking are:

1. California
2. New York
3. Connecticut
4. Washington
5. Pennsylvania
6. New Jersey
7. Rhode Island
8. New Mexico
9. Colorado
10. Maryland

This is our second year performing these rankings, and there were some minor shifts in the vulnerability one but some big ones on the policy front. Colorado, New Mexico and Pennsylvania for example, are newcomers on the top ten list. That’s good news for consumers and the environment, and we hope that our annual ranking will spur virtuous competition to rise through the ranks by adopting strong policy to cut oil dependence.

The sobering news is that every state has room for improvement, and that states can’t do it alone. We need the federal government to break through the gridlock and put complementary, supportive policies into place.

The bottom line is that gasoline remains a commodity unlike most others. We have to use a lot of it, and there are few substitutes. The only way to break the habit is to adopt aggressive policies that generate more choices for consumers, in the forms of efficient cars and trucks, transportation alternatives like commuter rail, and new energy sources for our vehicles. We look forward to tracking state progress toward that goal in the coming years.