Since the early 2000s, there has been increasing research on the connections between transport and social exclusion in Europe. Several studies have used the notion of “forced car ownership” to refer to households that, despite limited economic resources, own and use vehicles as the only viable means of accessing housing, essential services, and opportunities. Something that has been linked to a variety of negative consequences, including reduced travel activity, cuts in other parts of the household budget, and vulnerability to fuel price increases.
Now, with the price of gasoline through the roof, as a result of the conflict in Ukraine and the paralysis of the supply chain, this group of people is experiencing a drama.
Forced car ownership. The notion of ‘forced car ownership’ (FCO), born out of transport research in rural areas of the UK, is used to define households that own cars despite limited economic resources. This condition is believed to cause households to reduce spending on other necessities and/or reduce travel activity to a minimum, which may lead to social exclusion. In addition, the forced possession and use of a durable good can cause material deprivation, economic stress and vulnerability to increases in fuel prices.
The study. Several researchers have used data from the 2012 EU “Income and Living Conditions” (EU-SILC) to shed light on this phenomenon in the UK and Germany. Through data analysis they were able to show the social and spatial patterns, the intensity of social exclusion, material deprivation and economic tension between households. The investigation concluded that nothing less than 6.7% of households in the UK and 5.1% in Germany were FCOs.
Ca. 9% of the UK population has low income and high motoring costs = they’re in economic stress. These people also find it more difficult to reduce their fuel consumption (low price elasticity of demand)
See linked thread for paper & detailed results https://t.co/B3GzlNp54m pic.twitter.com/afOxUqlTDv
— Giulio Mattioli (@giulio_mattioli) March 10, 2022
Implying? This may suggest that the ownership and use of an expensive durable good like a car (whether “forced” or not) can result in hardship and economic stress for households with limited resources. In particular, they found evidence that this set can forgo spending on home heating to pay for car use. Furthermore, the findings suggest a relationship between status and household debt. They are relatively likely to have unpaid arrears, possibly including car loans. The results also show that households are more likely to have mortgages and less likely to rent at reduced rates.
a problem today. Europeans, already struggling with rising costs of living, now face an even deeper impact on their livelihoods, as the conflict in Ukraine drives up fuel and food prices and threatens to undermine a fragile economic recovery. . The increase in the price of crude oil in world markets has caused the biggest weekly jump in history in gasoline prices in some service stations in Europe, pushing them in some cases above 2 euros per liter of unleaded fuel.
In Portugal, the poorest country in western Europe with 10% of the population earning a minimum wage of 705 euros, drivers have been rushing to fill up the tanks before more price increases arrive. A diesel car with a 50 liter tank costs 91 euros to fill up. The German automobile organization ADAC estimated that diesel prices had risen 28% in six days from March 1. And it is that heating oil prices are also rising as homeowners increase purchases of the fuel, which many Germans still use to heat their homes.
chaos for homes. In Britain, the Resolution Foundation estimated that the conflict would lead to higher inflation, cutting the real level of typical household income by 4% over the next year, the steepest drop in nearly half a century. The Italian Ministry of Economy pointed out in a report that “the increase in energy prices and the consequent increase in inflation represent a strong risk for the economic well-being of citizens.”
In Spain, this week, 95-octane gasoline already reaches an average price of 1,680 euros per liter at Spanish pumps. And diesel comes close, marking an average amount of 1,581 euros per liter, according to data from the latest Petroleum Bulletin of the European Union. In both cases, it is the highest price since records began, which is to say that it is the most expensive in history, since the bulletin has followed the Spanish market since 2005. Without a doubt, those who depend on cars for living are the ones who are going to come out of this worst off.
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