The States of High Gas Prices

Posted by Eric de Place

11/20/2007 11:40 AM

How oil-intense is your state's economy?

Last time I checked, oil prices were hovering just below $100 per barrel. This reminds me of something I used to obsess about: high oil prices hit some places harder than others.

All else being equal, oil-efficient economies are more insulated from oil price shocks than are economies that require large oil inputs to function. I'm not talking about the amount of oil consumption, but about the "oil-intensity" of an economy. New York state consumes a lot of oil and it also produces a lot of wealth. Other states, such as Louisiana, consume a lot of oil, but don't produce anywhere near as much wealth per unit of energy. (In fact, New York produces five times as much wealth per barrel of oil as Louisiana.)

Just so, when oil prices skyrocket, Rhode Island suffers less pain than Texas. And Massachusetts feels less of a pinch than Wyoming. So at the risk of oversimplification, I'll propose a little schema for the future:

If the future is likely to bring high oil prices; and..
We'd like to remain prosperous; then..
We should probably start weaning our economies from petroleum.

Brilliant, I know.

I guess, one potential lesson here is that our big capital investments shouldn't expose us to decades of oil price shocks. (Yeah, I'm talking to you, highway.) They should insulate us from high oil prices. (Oh, hi there, compact walkable neighborhood.)

So, how do all 50 states stack up? And how does the Northwest fare? Find out below the jump...

For context, on average, the US consumes 25 gallons of oil for each $1,000 of GDP it produces.

Gallons of oil per $1,000 of gross product
1	New York	15
2	Rhode Island	17
3	Massachusetts	17
4	Colorado	18
5	California	18
6	Maryland	18
7	Illinois	19
8	Connecticut	19
9	Nevada	19
10	Delaware	19
11	Michigan	20
12	Arizona	21
13	Oregon	21
14	Wisconsin	22
15	North Carolina	22
16	New Jersey	22
17	Virginia	23
18	Minnesota	23
19	Ohio	23
20	Pennsylvania	24
21	Georgia	24
22	Washington	24
23	Utah	24
24	Florida	25
25	Nebraska	25
26	Idaho	26
27	Missouri	26
28	Tennessee	27
29	Indiana	28
30	South Dakota	28
31	New Hampshire	29
32	Iowa	29
33	New Mexico	30
34	Vermont	31
35	Kansas	31
36	Alabama	33
37	South Carolina	33
38	Arkansas	34
39	Oklahoma	34
40	Kentucky	40
41	West Virginia	41
42	Hawaii	41
43	North Dakota	43
44	Maine	44
45	Mississippi	46
46	Texas	47
47	Wyoming	48
48	Montana	49
49	Alaska	67
50	Louisiana	75

Obviously, there are about a trillion reasons for the way these rankings play out. (And keen-eyed readers may notice that energy-producing states are also the most oil-intense economies.) But it sort of doesn't matter why an economy is oil-ineffecient. After all, it's not as if Kansas is going to get a discount on gas prices because it's rural and spread out. Rather, places that need a lot of oil to drive their economies will simply find it tougher to keep up if high prices become the norm.

As a postscript, the United States and Canada are two of the most energy-intensive economies in the world. Countries like Japan and Germany can produce two or three times as much wealth with the same amount of energy. So, all else being equal, when oil prices get high, the North American economy feels two or three times the pain as some of our principal competitors.

So there's your Turkey Day conversation starter. You're welcome.

I calculated the figures above using 2004 oil consumption data from the US Energy Information Administration, and 2004 gross state product data from the US Census Bureau.