Running on Fumes

Running on Fumes

Unless the federal government does something now, rising gas prices have the potential to break the blue-collar backbone of many American towns.


More than 100 miles north of Sacramento, the flat farmlands of California’s Central Valley give way to the forested mountains and breathtaking grasslands surrounding the 14,000-foot Mount Shasta. It is a remote landscape–more akin to Wyoming’s Big Sky Country than to the rest of California–dominated by the glacier-covered Shasta and the menacing clouds that frequently cluster around its peak; and, when the tourists and the second-homers from the Bay Area and elsewhere in the region are factored out, it is a poor landscape. It is also a place where distance is an irreducible fact of daily life. Because so many residents rely on cars to get between the far-flung towns, they are particularly vulnerable to oil price fluctuations, and many are at risk of economic catastrophe as gas prices at the pump soar.

The towns strung along Interstate 5 and at points east and west of the highway, hamlets like Dunsmuir, Weed, Fort Jones, Callahan and Yreka, ooze character. Yreka–one of the few towns in the region not to have witnessed a population decline since 1990–still calls itself “the Golden City,” a throwback to its glory days in the mid-nineteenth century, and still boasts Wild West saloons and elegant Victorian edifices along its central drags, Main and Miner streets. Similarly, the little railway town of Dunsmuir continues to pride itself on its charming, somehow anachronistic, eccentricity–in the window of a downtown law office is a plaster-cast skeleton reclining in a dentist’s chair, an aviator’s leather cap and goggles adorning its skull.

But all the character in the world can’t hide the fact that these are low-income communities–poor cousins to the tourist town of Mount Shasta itself, where “log cabins” sell for $1 million.

Close to 10 percent of Siskiyou County’s workforce is unemployed. For those with jobs, money is tight: According to Bureau of Economic Analysis data, the county’s per capita personal income is $23,807, only 76 percent of the national average, placing it forty-third of fifty-eight California counties. Leave out the government jobs in the county seat of Yreka, and the numbers are even worse: The unincorporated town of McCloud, for example, has a per capita income of slightly less than $16,000.

Following the implosion of much of the timber industry, job options aren’t exactly legion here, and what employment there is is concentrated in a handful of towns: There’s a Wal-Mart on the southern edge of town at Yreka; the county has three bottling plants that package glacial waters from Shasta; there are shopping malls in Redding, to the south; and there are the hotels and restaurants that cater to tourists. “We don’t have very much work in the community right now,” says Mike Stacher, general manager of the McCloud Community Services District. “We have $8-an-hour jobs here, which is unlivable as far as I’m concerned.” Not surprisingly, since 1990 a large percentage of Siskiyou County’s working-age population has decamped to other locales.

While much ink has been spilled over the potential problems suburban and exurban commuters would face if the era of cheap oil really sputtered to a close, the most immediate victims are likely to be the long-distance commuters in places like Siskiyou County, too remote even to be considered exurbs. A perfect storm of economic changes could, quite simply, render towns like McCloud and Yreka unlivable for working-class residents, administering a coup de grâce to a region already bedeviled by blue-collar job loss. In the same way that the end of ready pickings from the gold fields created depopulated mining ghost towns throughout much of the West, so the series of oil price spikes may profoundly alter the Western landscape, as well as many other remote, car-dependent regions of the country.

With only a rudimentary public transport infrastructure, centered on a handful of rush-hour bus routes to and from Yreka, and with many workers now having to commute to far-off service-sector workplaces a long way from the nation’s major oil-distribution networks, these towns are being hammered by some of the highest gas prices in the nation. When I drove up I-5 on September 12, before Hurricane Rita but two weeks after Katrina made an already bad gasoline price situation worse, the lowest price I found along this stretch of highway for a gallon of regular unleaded was $3.17, with another 20 cents added for the higher-octane stuff used by many bigger cars and SUVs. The highest, in Castle Crags, was a dizzying $3.44.

“I’m spending $40 to $50 a week on gas,” says 41-year-old Rosie Kerr, a resident of Grenada who works as a secretary at the Northern California Indian Development Council on Yreka’s Main Street and drives a 1992 blue Ford Explorer with 164,000 miles on it. Before taxes, Kerr, a mother of four whose husband is currently unemployed, earns about $21,000 a year. After taxes, she estimates, that works out to $1,200 per month. Tearfully, as she sits at her Formica desk, the shelves behind her filled with family photos alongside a large brown teddy bear, she explains that the higher gas prices have forced her to borrow from her mother just to be able to continue working. “My mother helps me. That’s the only way I’ve been making it back and forth for the past few months. I owe my mom thousands of dollars for gas. It doesn’t feel very good. It literally makes me feel like a heel. Because I can’t pay her back. And she’s been helping me with food too, because I don’t have enough income for that either.”

Twenty miles east of the pleasant Interstate stop of Dunsmuir, 37-year-old McCloud resident Christine Gannon lives in her mountainside house. She estimates that she and her husband are now spending $300 a month on gas for their vehicles and another few hundred on oil for the generators that supply their electricity. Christine recently moved from a job at a hardware store that paid $7.25 an hour to an AmeriCorps position with the McCloud Community Resource Center that pays only marginally more. Her husband, a truck driver for a fuel-delivery company, has an income that fluctuates monthly. The family has health insurance, but it comes with a steep $4,000 annual deductible. They have student loans to pay off, car payments to make, two growing boys to feed. Add in the extra few thousand dollars a year they are now spending on gas, and something’s got to give.

“We’ve had to cut back on entertainment. We’ve had to cut back on filling the house with groceries and having plenty of snackables,” explains Christine. “No vacations. We’ve had to postpone putting money away to buy a home. It makes me feel like having a decent home and decent life without having to stress constantly and worry–it seems like it’s just never going to happen, and dreams and hope and plans, they just don’t work out.”

In the months leading up to Katrina and Rita, as oil prices rose steadily, pundits kept saying that, in real terms, prices were still lower than their all-time highs in the early 1980s. Not until the $3 gallon was reached would that record really be broken. Moreover, many argued, at least until Katrina shattered the complacency, a vibrant economy was poised to absorb, with minimal suffering, the additional oil costs.

Yet in some remote California communities, prices had spiked well beyond the $3 mark as early as April of this year, and had been heading north for several years–in 2003, as local prices neared the $2.50 mark, residents of Yreka organized letter-writing campaigns and protests against high pump prices in front of the county courthouse, the largest, most symbolically powerful building in town. When I drove to Death Valley this spring along the arid eastern edge of the Sierra Nevada mountains, towns like Bishop and areas around Mono Lake were already at the $3 level, with local prices driven up by a combination of California’s more stringent environmental standards for refined gasoline, pipeline problems in the Southwest, higher gas taxes than in most states and the sheer distances fuel-delivery trucks have to cover in the California wilderness, as well as global oil market factors. By midsummer, according to information generated by the Oil Price Information Service, as well as private websites monitoring county gas prices, a host of other desert and mountain communities had joined the $3 club. And while many parts of the country were seeing $3 gallons in the wake of Katrina, California’s remotest regions, beset by long-term high gas prices for reasons having nothing to do with hurricanes in the Gulf of Mexico, will likely be burdened by high gas prices even if the rest of the country, after the hurricane season ends, returns to short-term “normalcy” and complacency about oil prices. That makes them, says Amy Detrick, a secretary in the county administration office, a harbinger of what’s in store for the rest of the country as the world’s supply of gasoline gets ever tighter and as price spikes triggered by local supply disruptions in an overstretched market become all too common.

Detrick has started taking the bus to work from the tiny village of Etna. Her daughter, however, doesn’t have that option. She works at a Subway restaurant in Yreka, a job that nets her about $300 per week. Getting off work at 9:30 pm, she misses all the buses home and has no choice but to drive the more than thirty miles each way to and from work. Even in her new Honda Civic, bought with help from her parents, that’s not far shy of $10 a day in gasoline costs.

“What are you going to do? Not work?” asks Mike Stacher, of McCloud Community Services. “Maybe it’ll get to a point where not working is an option.” Indeed, earlier this summer, as gasoline prices began hitting record highs, Rosie Kerr’s two brothers did both quit their jobs in McCloud. They could no longer afford to drive their pickup trucks the fifty-plus miles each way from their homes in Hornbrook, a small community several miles north of Yreka. It was actually more financially sensible to become unemployed and to join the legion of casual workers picking up local bit work whenever possible. If more residents start making similar decisions, the region’s blue-collar backbone could be broken.

That urban and suburban communities–with their affluent professional classes, increasing numbers of status-enhancing (and expensive) hybrid cars and at least partial accessibility to public transit systems–can absorb higher energy prices is not hard to believe. That residents of low-income areas like Siskiyou County could afford to eat the extra $5, $10, then $15, $20, $30 and $40 a week they had to spend on gas this year simply to drive to low-paying jobs in towns like Yreka and Redding, and that they can continue to do so indefinitely, is harder to believe. Indeed, the very fact that some commentators, such as the Cato Institute’s Jerry Taylor, so glibly assume (or, at least, assumed pre-Katrina) that an oil price shock can be painlessly absorbed shows just how invisible the country’s poor have become to much of its pundit class.

These are people who are continually juggling rent and food and medical bills, who tap their resources days before the start of a new pay cycle and routinely resort to credit card debt and other borrowing to weather the lean times. How, then, can the volatile oil market not be hurting them? People like Rosie Kerr who are already spending a disproportionate amount of their income on gas face a burden far in excess of that experienced by middle-class consumers, who spend only 3 to 5 percent of their money on fuel. Moreover, in regions like Siskiyou County, where everything has to be delivered over long distances, as gas prices soar so, too, does the cost of other goods.

“Where I used to deliver free all of my printing jobs, I can no longer do so,” explains 59-year-old Lyle Sauget, a Yreka print shop owner. “If it’s local, I charge $1. If it’s Mount Shasta or Weed, it’s $5 to $7. Fuel is affecting everything. Food. Clothing. Everything’s gone up. When they [locals] are already on a tight budget, it makes it pretty difficult. It takes an already depressed area and takes it down. As a business person, at a certain point you say, ‘I’d rather go work for someone out of the area than be a business owner.'”

Sauget, a tough-looking Republican whose storefront is bedecked with an enormous Bush/Cheney poster and whose display case boasts certificates of appreciation from the local branch of the Army Recruiting Command, is hardly the type you’d expect to hear denouncing oil companies. But ever increasing gas prices have him looking for answers. “I’d urge Congress to put a ceiling on these extreme profits,” he states, his face red with anger, his hand in a fist. “Price caps. They’ve got us by the short hairs, and if we don’t turn this around we’re never going to get out of this. I support basic Republican ideas, but I’ve always been of the opinion that you must control the corporations. If the corporations control you, you’re in big trouble.”

In a place where small houses rent for as little as $300 to $500 per month, some people, says Castle Crags Chevron station manager Nick Demarco, are likely spending more on gas these days than on rent. An average fill-up, not too long ago, would have been $20 to $40. Now, Demarco calculates, “it’s $50 to $80. That’s considerable change. People are still buying the same amount of gas, and buying less of other stuff to make up for it.”

Kerr now changes her own oil and tries, as best she can from reading a few car maintenance books, to give her Explorer its tuneups. “I can’t afford to go downtown to have someone else do it for me,” she explains. “I’ve thought about selling some of my stuff. I have some antique radios from my grandmother. I’ve been putting that off for a year now. I can’t fill my tank. I haven’t been able to fill my tank in a year or two. I do $20 here, $20 there. I do without food to get gas, pretty much regularly. There’s never any breakfast. Nobody eats breakfast in my house. My mom feeds me lunch after she gets off work. Maybe two times a week we go without dinner. Eat nothing. My boss was nice enough to let me cash in some vacation time last month, so I had enough to buy some groceries.”

In a nutshell, Kerr’s experience shows up the fallacy of the laissez-faire notion that free-floating prices alone are a fair way to regulate consumption of a scarce commodity like gasoline. While higher prices might stop some tourists from driving up to Castle Crags and might curtail the discretionary gas use of the middle classes, as long as people live in regions like Siskiyou County and commute to far-away jobs in places that are hard, if not impossible, to reach by public transportation, these people are going to need gas. And as long as they need gas simply to continue working, they are going to do whatever it takes–short-changing themselves on food and medicine, charging the gas on credit cards, deferring car repairs or upgrades to better, more fuel-efficient vehicles–to keep their tanks full. After all, entire communities and lifestyles and job choices and consumption patterns have been crafted over the better part of a century on the basis of cheap and plentiful gasoline. Suddenly change the equation without offering any government relief and, even though gas remains cheaper per gallon than in much of the rest of the world, the relative difference will prove disastrous.

Instead of demand for gas immediately responding inversely to rising prices, in places like Yreka demand will likely remain stubbornly resilient until the point of economic collapse, when it will become unfeasible to borrow any more to pay for gas and residents will simply have to up their stakes and leave. Paradoxically, it is even conceivable that the higher prices might, at least in the short term, lead to more rather than less demand for gasoline in places like Yreka.

In economics there is a mythical beast known as a Giffen Good. A Giffen Good is a basic commodity that absorbs a large proportion of a poor population’s income. As its price goes up, more and more income is absorbed, leaving less for anything else. Because it is a staple, as other staples are forgone what little money is left over gets spent on the higher-priced good that’s causing the financial chaos in the first place. Nobody’s quite sure if such a creature exists. The Victorian-era British economist Sir Robert Giffen, after whom it is named, argued that potatoes during the Irish potato famine fit this bill for the starving Irish. Since potatoes already made up the bulk of their diet and consumed most of their income, as prices rose due to the potato shortages, what little discretionary money they had for meat and other food disappeared. No longer left with enough for even morsels of meat, the peasants desperately threw their remaining pennies back at the potato vendors for a few more spuds, thus driving prices of the scarce commodity up still further. More recently, two economists at Harvard’s John F. Kennedy School of Government, Nolan Miller and Robert Jensen, have made similar claims about rice consumed by peasants in southern China.

Obviously, at some point, soaring potato prices would have curtailed absolute demand simply because nobody would have had enough money to buy any, and the “normal” laws of the market would have been restored. Giffen’s point, however, was that prices would have to rise beyond all reasonable levels before that critical peak was reached and demand for a scarce commodity began slacking off.

Extending the argument to gasoline, it is at least possible that, as gas eats up a higher percentage of poverty-line rural workers’ incomes, drivers will scrimp on things such as their quarterly oil change, their 30,000-mile tuneups, as well as minor repairs to their vehicles. They will likely also defer the purchase of new cars. People will, in other words, probably drive older, less well-maintained cars, one side effect of which will be decreased gas efficiency and the need for even more gas to get them to and from work than they were consuming earlier in the price cycle. Kerr’s old Explorer gets only twelve to fifteen miles per gallon; her husband’s 1974 truck gets even worse mileage. In a rational world, both would be able to buy more fuel-efficient vehicles. In the Siskiyou County of 2005, however, neither can scrape together enough to make the upgrade.

If oil prices continue their relentless march upward, Lyle Sauget fears that “Yreka will eventually collapse. You can only pass so much on to people who are already overburdened.”

With the decline of the local timber industry over the past decade or so, the age distribution of Siskiyou County’s roughly 44,000 residents has dramatically shifted. Young adults of child-rearing age, along with children, have been replaced by retirees, many of them coming in for the landscape from urban sprawls to the south. Fifteen years ago the county had close to 7,000 residents in the 30-39 age bracket. Today, it has only 3,500. Conversely, the number of residents in the 50-59 age bracket has risen from about 4,300 to almost 7,500. Add unaffordable gasoline, and Siskiyou County might one day find itself bereft of most of its working-age population, its demographics increasingly defined by the process of geriatric gentrification.

It is a preventable scenario. But prevention involves the sort of innovation the Bush Administration, besotted as it is with laissez-faire triumphalism (not to mention oil-industry campaign cash), has been reluctant to embrace. “You could,” says Judi Greenwald, director of innovative solutions at the Pew Center on Global Climate Change, “draw an analogy with the Low Income Heating and Energy Assistance Program [LIHEAP], a federal program where grants are given out through the Department of Health and Human Services to the states. They use the money for helping poor people pay their heating or energy bills, and to do upgrades–you can get assistance for insulating your house, filling in cracks. At least theoretically, one could have a federal program that gives out grants to states to help people pay gas bills and possibly buy more fuel-efficient vehicles.”

Absent such practical interventions and broader changes in federal energy policy, Yreka–the Golden City–may one day be a new sort of ghost town, its homes housing affluent outsider-retirees, its hotels and bars catering to drive-through tourists and serving up kitschy reminders of the glory days when oil was cheap and blue-collar people could afford to live in Siskiyou County.

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