I'm still in southwestern Virginia, where you pretty much have to drive -- fairly long distances much of the time -- to get anywhere. One thought I had was how high gas prices would have to go before people simply couldn't afford to get where they need to go. My conclusion is that, in the short term, people will generally cut back on other expenses in order to keep driving, hoping that gas prices go down again. The fancy way to say this is that the short-term price elasticity of demand for gasoline is very low. In the longer term, however, it might be a different story, if energy prices stay high and people make fundamental changes in their living habits, vehicle purchase choices, etc.
Which brings us to today Fredericksburg Free Lance-Star, which asks if we're on the verge of something they call "suburban flight."
ASTRONOMICAL oil prices are causing problems for all Ameri- cans--from higher gas and heating-oil costs to higher food bills. Citizens in suburban locales are more likely to feel the pinch, as their very existence requires motoring. But an answer lies just down the road: cities.If any good comes from the fossil-fuel crunch, it will appear in increased energy efficiency and a new appreciation of city-centric life. Assuming the economy continues down its current path and oil prices stay elevated, many of the amenities of modern life will become elusive. Suburban-living models could fail, leading to a new golden age for America's cities and towns.
On its face, suburban development has some appeal, but its foundations become shaky in tight financial times. Based on excessive square footage, short home life cycles, and cheap transportation, subdivision development not only renders swaths of land unproductive, it leaves homeowners out on a limb when basic commodity prices rise.
It's an interesting argument, and it's certainly possible that we could have a reverse of the suburban/exurban sprawl pattern of the past few decades. For this to happen, my guess is that we'd need sustained high energy prices, with oil over $100 ($150?) per barrel, gasoline at $4 per gallon, something along that order. Still, it took us many decades to develop the current sprawl model, and it's going to take many more decades to stop and reverse it. Personally, I'm skeptical, but I am definitely convinced that there's some level of energy prices at which "Suburban Nation" becomes problematic. What do you think?
The dark side of this surreality is that the places far from these hallowed urban cores are experiencing unprecedented decline and, according to some experts, threaten to become tomorrow's slums.We're not talking about mean inner city streets getting meaner, we're talking about the pristine, newly built developments of four-bedroom, three-bath dream homes produced in the last housing boom becoming ghettos for the poor and the disenfranchised.
Slumburbia? After decades of middle class flight from the cities in search of safe neighborhoods and good schools - a flight that continues today even from gentrified cities like San Francisco - it's hard to conjure the image of a truly derelict suburbia. Will all those manicured lawns sprout weeds and broken bottles like a Baltimore back alley? Will drug dealers take over the local cul-de-sac? Will squatters set up camp in the neighbor's McMansion?
Whether this scenario plays out or not, I don't know, but at least there are more people questioning the status quo.
Certainly this is not happening in NoVa.
The other problem is that McMansions cost a fortune to heat and keep cool, and my frank opinion is that many of them aren't built very well. The builders slap them up, but the paint and plaster look nice so the buyers think they are getting a quality product.
Grocery store owners will build wherever there are enough rooftops within a specific distance. If there is a community that is lacking a grocery store, it's either too sparsely developed (because of snob zoning?) or it's a marketing opportunity.
Most academic experts on housing construction would tell you that houses are better built today than at anytime in human history. BOCA codes, while making houses more expensive, have made them safer and stronger.
The homes may be safer, but the builders will cut corners every chance they get. That's a common story from anyone who has ever lived in a new home, btw. Some of the issues are easily fixable, others aren't. They spend the money on things that have eye appeal, or on whatever fad the consumers are hot for at the moment.
There will always be a niche for telecommuting but it will always be a small fraction of the workforce.
What the authors of such articles do not know is that suburbanization is a phenomenon that dates back at least to the Romans (See Sam Bass Warner, Street Car Suburbs) That suburbs in America have been documented to the 19th and late 18th centuries. (See Jackson's Crabgrass Frontiers, and Forbes, The Life and Times of Paul Revere, See also last night's beginning of John Adams on HBO and McCullough's book upon which it was based)
The drive of Americans to own their own single family home (sfd) is such that they will sacrifice many other elements of their lives to achieve this end. It's part of the yeomanry vision of Jefferson and the entrepeneur vision of Hamilton.
It's also an increasing part of European culture (See Brueggemen, Sprawl a Compact History)
In inflation adjusted terms, we are just now getting back to 1979 oil prices. Even in those days of 21% prime interest rates, folks were still buying sfds in the suburbs.
These oil prices will push car buyers away from SUVs before it drives them away from sfds. These prices will drive car buyers to hybrids but not back into multi-family units in central cities.
What is apparent is the U.S. while we want to complain about prices at the pump and blame oil companies or corporate America would it not seem appropriate to evaluate other prices in this "global" economy. Excluding Venezuela (.12g) and Saudi Arabia (.91g) because the oil is government-run and pricing kept artificially low where can we loo to find gas cheaper than U.S.? Nigeria .38, Eqypt .65, Russia 2.10, South Africa 2.62 are examples but who is paying higher prices? Just about the entire span of Europe. UK is 5.79, Ireland 4.78, Netherlands 6.48, Norway 6.47, Italy 5.96, Denmark 5.93, Belgium 5.91, France 5.54, Germany 5.59 and then we only have to look to Japan and see they are at 4.24 a gallon (all in USD by the way)
These are but a few examples of who is paying higher gas prices so given our current situation we, if we truly believe in this world market economy model, cannot complain too much about current prices. Its a great political target to be sure for exploitation but the reality of it is prices could be much much higher. Sure many countries in Europe relative to the cost of a gallon of gas pay 75% of that price in taxes but I cannot help but wonder if that is the direction we could be headed as even here in Virginia there is always consideration given to raising the gas tax to pay for such things like transportation funding.
A bigger issue is not the price of gas or the oil companies that produce the gas but rather the fact that in the last ten years it seems as if these companies (oil/gas) are as much in the finance business as the oil business in that much of the gas at these levels is being purchased on branded credit cards available by every gasoline brand.
VISA's endeavor to go public along with Mastercard's huge success as a growth story on Wall Street is a case in point maybe and a study would really be nice to have done on how much of those profits being racked up are related to gasoline charges and other cost of living realities and not just consumer related goods.
That same valuation is true for both ride-sharing and vehicle purchasing decisions as for distance someone is willing to commute.
Gas was effectively that expensive on the Japanese market in the late 1980s when I was stationed there, and that was the only time I saw Americans (in this case servicemen and women and their families), willing to share rides to the base grocery store, video rental place; willing to sacrifice a yard for closer in living, willing to commute via bike most fair weather days, etc.
Of course gas was much cheaper on base, but that was also rationed to prevent black-market trading; and the base service station was not always open at convenient times.
I saw habits change back to American-normal whenever gas prices on the Japanese market went under $7/gallon (keep in mind this is/was a fuzzy comparison because they were selling in Yen/Liter - so double conversion math is involved and on a VERY fluid exchange rate).
When people are single city life is desireable. Then the family comes along and your issues and priorities change.
I will focus on the two big issues
1. Education for your kids becomes a high priority and most city school systems are below average
2. Space and housing. It is true that many families live in two bedroom apartments. However, it is also true that most Americans desire a larger space with a yard. In order to afford this "American Dream" people are willing to drive to qualify
In conclusion
Both of these issues override the cost of energy/gas in my opinion. The natural correction in the housing market is actually a net benefit long-term allowing more people to afford to live closer in.
Its similar to the transportation issue. As much as people love to complain about traffic its still not that much of an issue for most people when they are looking about where to live.
Education/Safety, space, and cost (list price) trump everything else
The largest point of all. Americans love to complain (blogging which has some positive points is really just another form of complaining when you think about it) but most of us are too lazy/stupid to actually do anything about it. Blogging does help educate but then people need to act.
Here is one big problem that is exacerbated by high gas prices: Jobs are hard to find. Good jobs are harder to find. You need to work and you cannot give up your job even if gas prices are high.
Here is an example: My brother is self-employed. My sister-in-law drives 60 miles to work through two counties. She works at a plant that builds composite parts for military jets. It is expensive to drive, not only because of gas, but also because of the wear and tear on the car. It is hard to commute with others from the same area because not many people who live close-by work at the same place or work the same shift or hours. That is the reason you see so many people here driving alone to work. I lived for many years in NOVA and know that workers there also have reasons for driving alone--in the past usually for convenience, if we are being totally honest. (I know that is changing, and I know more are using Metro, but it only runs in certain places.)
Back to my family anecdote about SWVA--my sister-in-law has tried to find work closer, but she cannot find anything comparable. Because she is college educated, she acquired a quasi-managerial position where she works and her pay is commensurate. There is nothing closer without taking a big pay cut. Here is the real clincher. They have a young family and must have health insurance. They CANNOTgive up their insurance. Like many young families, children get ear infections, catch viruses at school, have injuries while playing-falling off a bike and breaking an arm. I know families who have to pay out-of-pocket for all these things, and they put off paying for health care for the adults or they don't have dental care because it is just too expensive. My brother is self-employed as I stated earlier, so they do not want to put themselves in the same position. They want the best for their kids the same as everyone does. So here is what it comes down to for many in the area--if they have a job with health insurance, they must do a cost-benefit analysis. Does the cost of driving to work outweigh the benefits of health insurance? It is getting to be a harder and harder choice for many people.