The record inflation that brutally hit consumers and businesses in 2022 has been named the culprit in the latest ALICE report that more than 40% of Michigan’s Upper Peninsula residents were barely treading water economically that year.
Although the rate of inflation nationally has fallen from a high of 9.1% in June 2022 to its current 3.4%, NerdWallet notes that “consumer price inflation rose 19.32% between January 2020 and April 2024, and particularly high housing costs persist.”
While those numbers may be sobering for the rest of us, they could be downright terrifying for ALICE families in the household facing the threat of a Line 5 closure. If Gov. Gretchen Whitmer and Attorney General Dana Nessel are successful in their attempts to permanently shutter the dual pipelines that transport 540 barrels of light crude underneath the Straits of Mackinac each day, Michigan households could experience an increase of more than $23.7 billion in fuel costs over the first five years, according to a 2022 study by The Consumers Energy Alliance.
ALICE is the United Ways’ annual nationwide Asset Limited, Income Constrained, Employed report. The most recent ALICE compiled measurements from 2022, a year the study concluded nearly half of all U.P. homes were in financial straits.
The ALICE report calculated that, of Michigan’s 4,056,442 households in 2022, 13% earned below the Federal Poverty Level; 28% met ALICE criteria, earning above the FPL but without enough income to pay for essentials; and 41% were below the ALICE Threshold, calculated as poverty + ALICE divided by total households.
“They’re employed, they’re making money, but they’re still living paycheck to paycheck,” United Way of Marquette County Executive Director Andrew Rickauer told TV6, “Making those tough decisions every week of ‘Do I get medications? Do I get food? Can I pay rent? Can I afford gas to get to work?’”
The Michigan Association of United Ways Director of ALICE Bobby Dorigo Jones told TV6 that he blames record inflation in 2022 is a contributing factor to these numbers. The average inflation rate that year was 8%, but was measured at 9.1% in June 2022.
“We saw the inflation for a family’s budget rise by about 8% in the most recent year for the ALICE Project,” Jones said. “While wages increased at the same time, they didn’t keep the pace.”
Keeping the lights on and the furnace blowing in the winter and the air conditioning and refrigeration operational for cash-strapped households would be exacerbated by decommissioning Line 5. A 2020 study conducted by Isaac Orr, then a policy fellow at the Center for the American Experiment, and Jason Hayes, environmental policy director at the Mackinac Center, calculated the additional costs that could send U.P. household budgets into a death spiral.
An estimated 23,000 U.P. homes are heated by propane. Hayes and Orr estimate the cost to convert those homes to natural gas would exceed $80 million, provided there exists an available gas line in the area. If not, the cost of new pipeline construction would run between $3 million and $13 million per mile (in 2020 dollars). “[I]t would easily cost the U.P. over half a billion dollars to make natural gas the dominate heat source,” according to the authors.
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If households opted to switch to electricity, the authors estimate the change would result in an annual home-heating bill increase between $3,436 and $3,892 in 2020 dollars.