Gregor Macdonald
California has over 36 million residents. But 60% of the state’s population, over 22 million people, live in the five big counties of the south: Los Angeles, Riverside, San Bernardino, Orange, and San Diego. Given that California (just like the US) has nearly as many vehicles on the road as people, this means that Southern California not only contains roughly 7.00% of the US population, but also 7.00% of our nation’s vehicles. For a region built originally for car commuting between vast tracts of single family homes, 100 dollar oil in 2008 was quite painful. However, as we head towards 80 dollar oil here in 2009 we should consider the economic situation is more fragile than one year ago. And thus, California’s breaking point from high gasoline will now come more quickly.
At this week’s ASPO conference in Denver there was a convergence of thinking that when oil rises above 4.00% of GDP, the US economy starts to falter. An additional problem is that new oil really needs global prices above 70.00, on average, to make it worthwhile to pursue.
California: Leveraged to Gasoline Prices and Nearing the Breaking Point
