Just a few years back, everything was going along fine. People were getting great new-home deals in distant suburbs, gasoline was steady at around $1.50 per gallon and there wasn’t too much concern about the cost of commuting.   But in early 2005, gas prices started to climb. Middle East turmoil and the power of a Gulf Coast hurricane kept the pressure on, and before anyone knew it, gasoline was reaching $3 a gallon. And give or take a few cents, that’s where it’s been ever since.    “Two years ago we all would have been appalled to pay $2 a gallon for gasoline,” said Rose White, public affairs director for AAA Midwest. “Now, we would be relieved.”

Most experts agree that the days of $2 gas are over. Prices are only going to go up from current levels in the coming years, and those prices, which some say could reach $5 a gallon, will reshape the way many people live there lives.

“Once the realization soaks in to people that high-cost gas is here to stay, you will start to see people change their driving habits and the way they live,” White said. “They’ll have to make adjustments to offset their fuel budget.”

In 2003, when the price of gasoline hovered around $1.50 a gallon, a commute from Indianola to downtown Des Moines could cost around $60 a month. Now double those figures and you have the price of a commute from Indianola today.

“And I would not be surprised if we look back on $3 a gallon as cheap gas in the coming years,” White said. “Paying $4 or $5 a gallon isn’t out of the question in the near future.”

Out of our hands

Americans simply have no control over many of the forces setting gas prices, White said.

“That’s what makes it very difficult to determine,” she said. “There are certain things that are out of our hands that will affect what we pay at the pump.”

William Boal, associate professor of economics at Drake University, listed several factors contributing to oil prices:

– Changes in supply, such as British Petroleum’s recent shutdown of certain parts of its Alaskan pipeline.  –   – Problems in the Middle East, home of the world’s largest oil producing countries.  –   – Environmental problems such as last year’s hurricane season, which destroyed energy infrastructure, causing a spike in the price of oil and gas.   –   – Growing demand from southeast Asia, especially China and India, which are growing much faster than the United States and are beginning to require much more gasoline.  –    Boal agrees that high gas prices are here to stay. He said he foresees a “gentle increase” over time as opposed to a sudden jump. And to add to the pain at the pump, products that you buy at the store will cost more as the cost for delivery rises.

“The price of crude oil affects a lot of things,” Boal said.

Many believe the rising cost of gasoline could push consumer spending down, as people put off buying unnecessary items and eat out less. White said there is already evidence that many people changed their vacation plans this summer due to higher gas prices.

“When the price of something goes up so much, there are short-term and long-term effects,” Boal said. “In the short run, (consumers) have less to spend on other things, and that has a dampening effect on disposable income.”

Though he doesn’t believe high gas prices will lead to recession, as happened in the 1970s, he said people’s lifestyles are bound to change.

“This won’t happen overnight,” he said. “People aren’t going to go out tomorrow and sell their home to be closer to work, or quit their current job to find one closer to home. But we will begin to see people taking a look at their commute when they do decide it’s time for a new home.”

This kind of gradual adjustment can be seen today in car sales, Boal said.

“You can see there is less interest in SUVs today than there was five years ago,” Boal said. “People didn’t run out and sell their SUV, but when they decided it was time for a new car, they looked a lot harder at more fuel-efficient cars.”

An informal survey at HomePages.com, a site associated with the National Association of Realtors, found that 45 percent of 2,000 readers polled in May agreed that gas prices were “very important” to them in choosing a home. Among the most important factors in a home location, a short commute was second only to a safe neighborhood.

“This is definitely becoming an issue for people,” AAA’s White said. “And it’s definitely becoming an issue for politicians as well.”



The economics of suburbia

White said that suburbia not only depends on autos for commuting to and from jobs, but that everything in the suburbs – from stores to schools to restaurants – requires increasingly expensive trips in cars.

“Suburbia is full of far-flung destinations,” White said. “It was oriented as a place where they could sell more goods and services, with shopping centers and subdivisions everywhere. It really maximizes the use of cars. It makes sense that, with high gas prices, the more-distant places are going to be hit the most.”

And these costs are not limited to simply gas prices. AAA issues a report every year analyzing driving costs for Americans. Gas price is only one consideration, as the organization looks at maintenance costs, replacing tires, insurance fees, registration and taxes to give drivers an overall picture of just how much it costs to drive in the U.S. Based on their figures, it costs roughly 13 cents a mile for small sedans all the way to 20 cents a mile for four-wheel-drive SUVs.

“Gas prices are only a piece of the puzzle,” White said. “But it is the most visible piece.”

The rising costs are causing some to give up on commuting altogether and turn to public transportation.

Brad Miller, general manager of the Des Moines Metropolitan Transit Authority, said express bus service to the cities outside Des Moines is seeing huge growth. On the buses to and from Ankeny, for example, ridership has increased 38 percent since July of 2005.

“We are actually beginning to have problems with overcrowding on the Ankeny route,” Miller said. “Overall, our express routes have seen an increase of 15 percent in ridership.”

Gas prices have definitely driven the increase, Miller said, and to prove that he points to where bus passes are being purchased.

“We’re seeing most of our new riders purchasing bus passes at Hy-Vee or Dahl’s in the suburbs,” Miller said. “Sales in those areas are growing much faster, which supports the idea that they have turned to us because of costly gas prices.”

The average price for a monthly bus pass is $35, Miller said. Over the course of a year, a commuter from West Des Moines can save $664 by riding the bus. And that is at current gas prices. If the price were to increase to $5 a gallon, which experts say is not out of the question, the savings riding the bus become $1,387 a year.

Employers are beginning to get the message as well, Miller said, with 40 downtown businesses subsidizing up to 100 percent of an employee’s bus fare.

“Principal [Financial Group Inc.] is one company whose employees ride for free,” Miller said. “That is a $500 a year pre-tax benefit to their employees.”

Starting Sept. 1, Allied Insurance employees will be able to use their employee ID badges as bus passes.

“They simply show their ID and they ride for free,” Miller said. “If that is a success, it might spawn similar initiatives with other companies.”

The MTA also has a fleet of 77 vans it leases out to use for van pooling, which Miller said was an extraordinary number for a city the size of Des Moines.

“That is the same number we had in Charlotte when I was there,” he said. “And Charlotte is about three times the size of Des Moines.”

An individual or company leases the van, the driver takes a driving safety class and the MTA provides the driver with fuel cards. They can then provide transportation downtown for as many as 15 passengers.

“We have seven vans running out of Indianola alone,” Miller said. “It has been a very popular program.”



No overnight solutions

“We used to think that the $2 a gallon would be the tipping point,” White said. “Now that it’s $3, and even though they’re paying more than they did a year ago, they’re still driving.”

Drake’s Boal said as time goes on, people are going to become less tolerant of long commutes. Whether that means leaving the suburbs behind or simply more people working from home is difficult to predict, but people’s lives will change.

“Changes will come, maybe not next year, but it will come,” he said.

White said the development of alternative fuels and raising fuel-efficiency standards are two paths the government must take in order to ease the increasing burden on commuters.

But even as drivers get temporary relief as the summer ends and prices drift down from the $3.05 high reached in the Midwest this year, White said people must begin to take a look at their lifestyle and prepare for the idea the driving a car is getting expensive.

“We’ve seen the last of cheap gasoline,” she said.