The Social Effect of Rising Gas Prices on the Lower Class, and Small Business Owners

The Social Effect of Rising Gas Prices on The Lower Class, and Small Business Owners

One of the largest financial burdens on the lower class and small business owners over the past six years has been the steady rise in gas prices.

“Gas prices have been steadily rising for more than six years. According to the U.S. Department of Energy, the average retail price of gasoline in the United States in March of 1999 was $1.05 per gallon. The price has been rising ever since, with prices reaching over $2.50 per gallon in August, 2005” (Patricia Schaefer)

This steady rise is something that cannot be ignored by economist and sociologist alike. Emile Durkheim, a sociologist who founded the theory of functionalism would see the gap widening of the upper and lower class’s due to increased gas prices, as a natural change, needed to sustain life in the world.

The rise in prices have been felt all over the world, for a person who drives fifteen thousand miles a year with an average of twenty miles per gallon, a sixty cent price increase means an extra four hundred-fifty dollars per year in gasoline. ("High gas prices widen divide between rich and poor," 2005) This may not sound like a whole lot being only $37.50 a month, but to a family who may be on the verge of poverty, this could likely put them over the edge.

The sad thing is that the families who feel this burden are the same families that were forced to move out of the expensive cities into more of a suburban living to counteract rising housing costs. The increased commute to and from work is now starting to be the number one reason why gas price increases are turning out to be as dramatic as they are.

The flip side of this is that due to increased energy costs, many Americans are being forces to downscale and move closer to their places of employment in order to cut down on commute costs. (Timothy B. Wheeler, 2005) It’s turning into a lose, lose situation for the lower class Americans because the economic pressure that is put on their shoulders by this increase is slowly running them dry.

The stratifications of this are felt across the board. “Money that goes into tanking up is money not spent at Best Buy, Wal-Mart or Starbucks.” ("High gas prices widen divide between rich and poor," 2005)

Amongst many of the people in the country suffering due to small incomes, is the elderly. “Americans 50+ reporting a yearly household income under $25,000 are significantly more likely than those of higher income to say they have limited or done without telecommunications, food, medical services, or prescription drugs because of the soaring gasoline prices.” (Jean Kalata, 2005)

Of these elderly Americans suffering from the rise in gasoline prices is Kenneth Taylor who tried to save money by not taking his high-blood pressure medications as frequently as prescribed found himself collapsed in the hospital. ("Rising Gas Prices Hit Poorest Americans the Hardest") There are many Americans out there cutting back on things that are truly important to their everyday health in order to go to work, visit family, go to the doctor, etc.

“Although posted gasoline prices have never been higher, the cost of fuel, when adjusted for inflation, is lower than it was at its peak in 1981” (Timothy B. Wheeler, 2005)

This is a very interested piece of data when closely looked at, although the prices may be “lower” by inflation standards, the rise has happened more rapidly. The increase came at a time when the economy was good, Americans were subliminally told not to save, but to rather spend and keep the bull market strong. Now with the onset of higher prices at the pump and savings accounts dwindled down at local merchants, everyone is hurting.

The other scope of the spectrum is the small business owner whose profit margins are closely tied to the price at the pump. Whether it is a local pizza shop, flower store, or even moving company, gas prices are closely tied to the profits in both delivery of product to customers or from distributors to retailers. For large corporations with huge client base, it is easy to pass the added overhead along to it’s customers, but for a small mom and pop stop this could mean losing it’s clientele and going out of business or selling the company off.

Santina Matwey, the office manager of Ray Bari Pizza in Manhattan has felt the pressure of high gas prices. Gas prices are an everyday expense for them, in delivering pizzas to taking delivery of such items of cheese, sauce, or dough to the store. One way Matwey has tried to combat the increase is to have delivery of pizzas be done on bike instead of by automobile. (Patricia Schaefer) Although this may work for stores in the center city, shops in suburbia with a larger geographic