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Ten cities hit hardest by high gas prices

Damages to oil refineries from Hurricanes Katrina and Rita have led to higher gas prices across the nation, though some cities have fared worse than others.David J. Phillip / AP file
/ Source: Forbes

The trip between Birmingham, Ala., and Atlanta is a nearly straight shot east on Interstate 20. An easy drive that, at around 150 miles, has recently become harder on the wallet.

"I delayed a trip to Atlanta until I could accomplish two things over there instead of one," says Carl Carter, president of Carter-Harwell Public Relations in Birmingham. Carter's family has four cars on the road. Though the vehicles are small, recent increases in gas prices "sting a little bit," and have caused the Carters to conserve somewhat, he says.

No part of the country has been spared the rise in gasoline costs, which increased to more than $3 per gallon over Labor Day weekend, in the wake of Hurricane Katrina. Since then prices have dropped slightly, but with nearly a quarter of the nation's oil refineries idle because of Hurricanes Katrina and Rita, on Wednesday the average price of a gallon of regular unleaded gasoline was still $2.81, according to the American Automobile Association (AAA). That's up nearly 48 percent from a year ago.

Though everyone is feeling the effects, some U.S. cities are being hit harder than others — not just because gas prices have risen higher, but because residents tend to drive more and incomes tend to be lower, magnifying the price increase.

Southern cities, including Birmingham and Atlanta, are taking a particularly hard whack, according to an analysis by Sperling's Best Places, a Portland, Ore.-based data firm.

In Birmingham, Sperling's estimates that this year, the average family with two commuters could spend $2,400 more on gas than they did last year. That's an increase of nearly 6% of the total median household income after taxes. And again, this is not the amount spent on gas, but the additional cost due to price increases.

"The impact in Birmingham is tremendous because we're so dependent on our automobiles," says Dr. Robert Robicheaux, chairman of the marketing and industrial distribution department at the University of Alabama at Birmingham.

Take a local household with the median income, which last year was about $41,000 after taxes for a two-earner family. There may be as little as $300 to $400 per month in discretionary income (money that is not earmarked for housing, food or other necessities), he says.

"When gasoline goes up $1.25 or $1.50 per gallon, to most folks that's a pain in the rear end," Robicheaux says. "But for people who are really pressed like that, it takes away a significant portion of their discretionary spending power."

The city has been providing carpool incentives and park-and-ride bus systems, he points out, but it's tough to change driver behavior. Fuel-wasting traffic, exacerbated by the fact that Birmingham only has a couple of major roads connecting downtown with the suburbs, doesn't help, he adds.

In Atlanta and Nashville, which also made our list of the ten hardest hit cities, a household might have to spend an extra $2,300 on gasoline this year. This Monday and Tuesday, at Gov. Sonny Perdue's urging, nearly every school district in Georgia kept schools closed in order to conserve gasoline.

Areas hit the least hard
Meanwhile, residents of cities such as Honolulu, San Francisco, and Boulder, Colo., are probably feeling less of a pinch. Gas prices have gone up, but residents drive fewer miles, and incomes are higher. An average two-commuter household in San Jose, Calif., might have their gas costs comprise an extra 2 percent of their income. In Anchorage, Alaska., that drops to just over 1 percent.

Sperling's Best Places began its analysis with 85 of the largest cities in the U.S., which are covered in an annual transportation study by the Texas Transportation Institute. Sperling's used data from the study to estimate how far a commuter in each city might drive each year, and used average automobile fuel efficiency information from the U.S. Environmental Protection Agency, as well as congestion information, to figure out how much gasoline a car might use annually.

The company used gas price data from AAA to figure out an annual cost of gas for a two-earner, two-commuter family, given prices this year and last year. Finally, Sperling's looked at the increase as a percentage of after-tax income. It used median household incomes for two-earner households from the 2000 census, and assumed a tax rate of 35 percent. For more data, visit Sperling's Best Places.

See which U.S. cities have been hit the hardest and the least hard by rising gas prices.