Location Intelligence on Fuel – Knowing Where Not to Buy Gas

By Hal Reid

_This past week we have had several news stories about oil and the effect of gasoline prices. This seems to be a location intelligence topic that affects everybody and should be explored.

First, several sample headlines:
Oil Prices Hit New Record High Over $76
Fox News – July 14, 2006 - Oil surged more than 2 percent to a record high near $77 a barrel Thursday on renewed worries over supply from major exporter Nigeria and as conflict between Israel and Lebanon heightened international tensions.

Nigeria: Explosion Shoots Up Oil Price
AllAfrica.com (Lagos) July 14, 2006 - Crude oil prices yesterday surged to a record near $77 per barrel as the international market was hit with fresh concerns over oil supply from Nigeria following the attack on an Agip pipeline in Bayelsa State as well as crises in the Middle East.

Venezuela's Citgo Cuts Supplies to US Petrol Stations
FT.Com - July 12, 2006 - Venezuela's state-owned oil refining subsidiary in the US is to halt petrol distribution to about 1,900 filling stations in the US.
Last week MapInfo issued a press release about the company’s research into how high gasoline prices were affecting Americans: "July 13, 2006 - MapInfo Corporation … today released top ten lists of cities with the biggest gas-guzzlers and the most fuel-efficient cars."

Here is what MapInfo discovered (from the release):
"With surging gasoline prices continuing be a topical issue, we thought it would be interesting to conduct research on which parts of the country are being most impacted," said Sebastien Rancourt, PSYTE Advantage product manager for MapInfo. "Our data and research capabilities enable us to dig deeply into consumer and marketing trends and uncover compelling insight. …

"Gas Guzzling Cities: MapInfo found Gillette, Wyoming leads the country as the city with the highest propensity for owners of large SUVs, trucks and sports cars - with residents twice as likely to own them than anywhere else in the country.
  6. HURON, SD
  7. PAMPA, TX
  8. NEW ULM, MN
"Gas sippers – "Take the Money and… Drive: With Hawaii leading the country with the highest gas prices, it's no surprise that MapInfo found that the top four cities with the most number of fuel economy cars are from the Aloha state. Below is the complete top ten list:
  1. KAPAA, HI
  3. HILO, HI
  6. BARRE, VT
  10. OAK HILL, WV
"Fuel Hits the Bottom Line - MapInfo also compared actual expenditure on gasoline to total income and found many areas feeling the impact of the rising prices aren't always high on the list of gas guzzlers. Below is the top ten list of the cities where the percentage of income spent on gas is the highest. MapInfo also did a reverse analysis and found the top ten cities where gas expenditures have the least impact on income.

Top 10 U.S. Cities by Gasoline Expenditure as a Percent of Income (annualized costs added) Annualized costs computed from percentage of household income.

Bottom 10 U.S. Cities by Gasoline Expenditure as a Percent of Income (annualized costs added). Annualized costs computed from percentage of household income.
Using the MapInfo numbers, the impact of gas prices may be greater in the top 10 cities due to several factors. In those areas, miles driven are likely to be greater because the distance between destinations (shopping, etc.) is greater. Also, the lack of public transportation available as an alternative to driving may impact the numbers.

So how does the price of gas affect me?
The American Automobile Association’s (AAA) website publishes average prices around the US and shows how the gas prices actually compare region to region. This listing from July 14, 2006 shows current fuel averages for that day. These prices do not reflect the new cost of oil at $76+ per barrel. This daily data is collected from 85,000 self-service gas stations.

Mid is typically 89-octane gasoline. Source: AAA.

The AAA also publishes the average cost of fuel by state for the previous month. They also offer a handy trip fuel cost calculator. Below is a map of regular gasoline prices for the month of June, 2006.

Gas prices for June, 2006. Source: AAA. (Click for larger image)

Actionable location intelligence

Knowing about high gas prices and the impact is one thing but being able to do something about it is another. Rather than drive around burning gas looking for the best deal, go to GasBuddy.com. It will help you find the lowest reported price in your area.

It is interesting to see how both international news and your location condition the impact of fuel prices. (Ed Note: check the article in this issue about PRS and assessing international risk.) Cars are a major purchase and our choice of a vehicle may be influenced by more than just gas efficiency. Small and cheap may not fit the bill. Smart Cars (two passenger, high gas mileage) may work well in the bottom 10 cities (where miles driven are low and there is public transportation), but may not be quite the ticket in those areas where long distances, weekly shopping trips and lots of poor weather are the norm. Everything is a compromise, and even more so at $3+ a gallon.

Published Saturday, July 22nd, 2006

Written by Hal Reid

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