Quantifying Local Economic Losses

I am a proponent of the Strong Towns idea, that we should be making decisions of local policy based on the quantifiable and sustainable best interests of the local population. It seems like a no-brainer, but the policy decisions that have typified the American experience since 1960 give the lie to that.

   

I particularly enjoy this video because it demonstrates the lack of understanding, the lack of even the basics of critical thinking, on the part of local officials. I'm not claiming that Huntington could be or ever has been the Paris or London of America: but how can someone look at the "old, outdated" city and consider it inferior to the blight that they're building now?

I was thinking about that one day while driving. I was stopped at a traffic light, actually, and began to count the cars and think about the amount of money that is lost to the local economy when people spend money on their cars. Now, this is debatable; there are a lot of local people who work on cars, sell car parts, sell insurance, or sell the cars themselves. There is definitely money circulating in the local economy that can be directly attributed to the automotive industry. The question is one of magnitude.

Let's simplify the problem by talking about a gallon of gas. The average price, as of February 10, is about $3.30. Generously, we'll say that convenience store franchisees make about five cents per gallon. Now, imagine that you live in a moderately-sized city, similar to Greensboro, NC. About 150,000 people work in the city. Two-thirds live inside the (expansive) city limits; one third live outside them. We'll be generous and say that it averages out so that everyone lives about five miles from work. We'll also suppose that everyone drives a reasonable car for their commute, and gets 30 miles per gallon.

So, how many gallons are required per day, assuming that these mythical Honda Civic commuters drive only to work and back home?

 $$\frac{150000 \times 5 \times 2 }{30} = 50000$$

Fifty thousand gallons of gas. How much are we paying for that?

$$50000 \times $3.30 = $165000.00$$

Okay, so we're spending a lot on gas.  Well, someone has to be making money, right? How much do the filling stations make in profit on those commuters' fuel? (Keeping in mind that the filling station is the only step in the supply chain of gasoline that actually contributes to the local economy.)

$$ $165000.00 \times $0.05 = $8250.00 $$

So, every day, the filling stations where these commuters are filling up their cars make $8250 in profit off them. Meanwhile, the local economy is losing about $156,750 per day. Or $783,750 per work-week.

A cool $39 million a year.