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Colin Peppard’s Blog

Cutting Back on Gas? Your Neighborhood Thanks You!

Colin Peppard

Posted March 10, 2011

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When it comes to gas prices, it's not just how much you pay, it's how often you buy. And driving less saves you money - a lot of it, in fact. Driving is expensive, and oftentimes cleaner alternatives are also more affordable. That can be a big relief for strained household budgets (pdf). But the money that you save doesn't only benefit your own wallet. It can also be a boost for your local community economy.

The National Building Museum's blog The City lays this out clearly in a post accompanied by one of their top-notch infographics.


When you drive less, much of the savings you'll see is due to the fact that you don't have to buy as much gasoline. Not only do you and your family save this money, you also likely spend some of it elsewhere. Maybe it's a movie or dinner out. Or some home improvements. Or a shopping trip at local stores. The bottom line is that, rather than sending your money to an oil company that likely isn't even in this country much less your community, your dollars stay in the neighborhood, helping to power the engine of your local economy. 

Economist Joseph Cortright at CEOs for Cities has been working with this idea for a while, applying it to the metropolitan area in a concept he calls the "Green Dividend". The premise is that the ability to access more opportunities - economic, as well as social and civic - and destinations with less driving increases welfare for residents in a given area. 

NYC Green Dividend.JPG

This can be seen clearly in New York City, America’s most dens, diverse, and populous metropolitan region. Cortright calculated that New York’s extensive public transportation network and high number of walkable and bikable neighborhoods are key contributors to greater economic well-being for residents.

Very simply put, while the average New Yorker drives about 9 miles per day, the average resident in any U.S. city drives about 25. This yields about $19 billion in annual savings on vehicle costs for the residents of New York (assuming an average vehicle operating cost of 40 cents per mile).

These economic benefits are not specific to large dense cities like New York. Portland, Oregon, which is much smaller, less dense, and less urban than New York, also fared well in Cortright’s analysis. Residents in the Portland area travel about 20 percent fewer miles per day then the average. This translates to about $1.1 billion dollars per year in savings to area travelers, or about 1.5 percent of personal income earned in Portland in 2005. 

Portland Green Dividend.JPG

These results are not unique to cities like New York and Portland. Indeed they can be expanded beyond your neighborhood or city to the whole country. At the national level, cutting oil consumption allows us to reduce the total amount of GDP we spend each year on foreign sources of oil. In 2008, that number stood at $357 billion worth of foreign crude oil, equivalent to 2.3 percent of GDP. 

In 2009, NRDC sponsored a landmark study of the technical potential to reduce oil use nationwide with a set of 50 transportation policy measures, entitled Moving Cooler. As part of this, we looked at the costs of implementing these measures, and the projected consumer savings as a result of their use. The results were staggering – between $2.2 and $2.8 trillion in cumulative consumer savings over 40 years.

Coming back to my initial point, the impact of rising gas prices is not only about how much you pay, but how often you buy. Unfortunately, not many Americans live in communities that have the kind of transportation options that allow them to buy less gas. That not only deprives them and their families of the Green Dividend, it deprives their whole neighborhood of these potential savings.

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BoMar 11 2011 07:04 AM

Great points this ian very useful information to promote urbanism. I specialize in energy efficient mtgs nat renovation lending for residential u have any useful tool information for areas off the southeast???

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