Moving on out

There are limits to the positive environmental change we can expect from high gas prices

Posted by Ryan Avent (Guest Contributor) at 11:03 AM on 22 Jan 2008

You can scarcely pick up a paper or turn on the television these days without hearing the word recession. Leading economic indicators have wiggled in different directions over the past few months, but the general trend appears to be negative. The conventional wisdom points toward an economic downturn of some kind during 2008, and businesses in all sorts of consumer markets are bracing for the inevitable tightening of purse strings.

A funny thing happened on the way toward economic slowdown, however. As one might expect, oil prices dropped on expectations of reduced future demand. As one may not have expected, the drop was puny, from just under $100 per barrel to just over $90 per barrel. Oil prices, it seems, are having a tougher time moving down than ever before.

Since 2003, real gasoline prices have doubled, from about $1.50 per gallon to around $3.00. That's a substantial increase; for most products out there, we'd expect a doubling of real prices in four years to generate substantial declines in consumer purchases. Not so for gasoline, which is what economists call an inelastic good -- a product for which big changes in price lead to small changes in demand. Something, in other words, that you need badly, like water, or insulin. Something you can't not use.

The Congressional Budget Office recently released a study (PDF) examining gasoline price increases and their effects on consumer behavior. The CBO report notes that in the short run, a 10 percent increase in gas prices leads to just a 0.6 percent drop in consumption. If that same price increase were sustained for 15 years, the drop in consumption would rise to 4 percent, a larger but still disproportionate adjustment. The report goes on to note that consumers have gotten substantially less sensitive to gas price increases over time. Why?

That decline in sensitivity has been attributed to growth in real income, which has rendered gasoline a smaller share of consumers' purchases from disposable income. Price sensitivity also has declined because a gallon of gas takes a car farther than it did in the past, in part because of fuel economy standards. Finally, the development of distant suburbs also has contributed by making some consumers more reliant on the automobile.

So income growth is important, although it's still the case that current increases in gas prices force consumers to shift spending away from other purchases and toward gasoline, making them feel less rich (because they are, in fact, less rich).

Efficiency and land-use patterns are the other forces shaping consumer dependency on gasoline. So what happens now when prices double? According to the CBO, which studied recent price effects in California, drivers drive a little slower. They take slightly fewer freeway trips, and where transit is an option, a 50-cent increase in gas prices reduces freeway trips by 0.7 percent and boosts transit ridership by roughly the same amount. They purchase different cars. For the first time in ages, light-truck sales began to decline in 2004, a trend that has increased the average fuel efficiency of new cars.

As a result, total national gasoline consumption has slowed considerably in recent years and has -- remarkably -- fallen in a number of recent quarters. Falling gasoline consumption has generated small drops in emissions, so while those high prices have proven painful for some consumers, they are demonstrating that increasing fuel costs can slow or stop emissions growth (and can do it less painfully if taxes are used, such that revenue can be plowed back into uses that benefit taxpayers in other ways).

A few things haven't declined at all in response to prices, however. Recent census data has made it clear, as I pointed out last week, that migration from denser northern states to low-density southern and western states continues. That continuing migration means that there's been no reduction in national vehicle miles traveled. Crucially, the CBO study shows that gas prices do reduce VMT where transit is an option, but have no effect on VMT where it is not. In the vast majority of rapidly growing cities and towns, transit is not readily available.

This is a significant point. Costly gas has nothing on home prices as a force for household migration. Congestion can encourage inward movement -- toward center cities -- among the wealthiest households, for which time is most valuable, but for most other families, time spent waiting in traffic, idling, burning gas, is nothing compared to the benefit of a super-cheap home 40 miles from work. Consumers adjust to short-term prices where they can, mainly by purchasing smaller, slightly more efficient cars, but big lifestyle changes just aren't in the cards.

That's kind of a scary thought. It suggests, for one, that any future backsliding on oil prices might quickly undo progress made on efficiency and gasoline consumption. It suggests, for another, that if prices do remain high and fuel-efficient cars continue to erode the connection between travel and gas prices, then consumers will have no compunction about spending ever more time on roads, living farther from their jobs in bigger houses, consuming a lot of whatever replacement automobile energy source we decide upon -- electricity or alternative fuel. It also means that congestion is going to get much, much worse.

So we have a bit of a problem. Without changes in the way we build our cities, we can expect continued increases in the number of automobiles on the road and the number of miles those vehicles travel. This is going to pose a challenge for any effort to curb emissions; even wholesale shifts in the vehicle fleet toward electric or biofuel automobiles will place significant demands on the power grid or biofuel infrastructure -- which may well overlap with inputs for food production. Both sources of alternative automobile power are under stress. Electricity demand -- and prices -- are increasing across the country, and the push to halt new coal capacity (which is desirable) is only going to constrain supply further.

It's good to know that emission reductions for the nation's vehicle fleet are possible, despite our heavy dependence on cars and our declining sensitivity to gas prices. At some point, we really have to ask if the best way to address our energy and environmental issues is to take as given ever more sprawling metropolitan areas involving ever longer commutes dependent entirely on automobiles. Yes, efficiency gains are available in such a world, but the less dense our cities, the costlier those gains will be. And all the efficiency in the world won't eliminate congestion growth, hours and energy wasted sitting in traffic, and the personal and environmental cost of having to get in a car -- however powered -- to get anywhere.

For story: Moving on out
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How to make cities more attractive?

According to Elizabeth Warren, co-author of "The two-income trap", one of the dynamics of post-WWII life has been this: The schools in the cities get worse, so in order to live in an area with good schools -- in suburbia -- the wife goes back to work, in order to afford the higher priced house in the better school district. Mostly this just increases the cost of housing, and now two parents can barely make ends meet when one "breadwinner" could do so before.

One of the reasons my family and I moved from NYC was because it had become too expensive to live in an area with a good school. So perhaps good schools would be a key lure -- along with moderately spacious (below 2000 sq feet), moderately priced apartments. So maybe emission won't go down until school quality in cities goes up, and there's more apartment construction in cities.

by Jon Rynn at 11:55 AM on 22 Jan 2008

In the short term...

...at least the current economic downturn, as a whole, is cutting consumption and production across a wide range of industries. Plus, the housing slump has started to make a dent in the construction of new suburbia-type developments.

by Tasermons Partner at 3:44 PM on 22 Jan 2008

How true ....

Jon I loved the school thing you mentioned ... we also pulled out of a city because they schools were horrible.

Then it hit me: people out there in the suburbs are more likely to become conservative, either themselves or in the aggregate. They are less likely to support Climate Change goals. Not that I'm in that line of research, but I've seen it firsthand. Seems for real. -sam

Onward through the fog

by Sam Wells at 5:40 PM on 22 Jan 2008

How true, indeed ...

Good point, Sammy. People in Carburbia become more conservative for a number of reasons.

First, there is the cognitive dissonance created holding an environmental ethic while having to drive absolutely everywhere and having made your children prisoners of into carless cripples of carburban design -- if you hold onto a meaningful level of concern for the environment while living such a lifestyle, the pressure between your values and your actions is likely to make your head explode. Thus, the values get compromised and, before you know it, you start grasping at things like agrofuels and the next generation of wondertoys (and there's always a next generation of wondertoys on offer) to persuade yourself that your little tiny bit of driving and flying around really doesn't make a gnat's ass worth of difference.

Second, the economic apartheid system of carburbia means that you are pretty unlikely to have many neighbors with significantly different views; homogeneity is itself a conservative force, as the only people you see different from yourself are brought to you by the media, which ...

brings us to point Three, which is the documented tendency of the obese media to want to scare the hell out of carburbanites, particularly with images of scary dark people and non-stop fear-of-crime stories. There are not many truly mixed places in carburbia -- once the percentage of people of color reaches a certain point, the who neighborhood tips and the whites flee further out.

Finally, as Barbara Ehrenreich so ably documented in "Fear of Falling" and "The Best Years of Our Lives," carburbanites are constantly marinated in the competitive, get-ahead ethic, which means that some must fall behind, left to the tender mercies of the market. They don't organize for better schools because both parents work and spend so much time in the car that they barely have time to sit down together for meals more than once or twice a week; both parents (where there are two) work because the overpriced real estate in Carburbia is supported by the School Fear Tax, which is the price of admission to the "good schools" neighborhoods.

And then there's the constant, nagging pressure to compete with the carburban neighbors, to make your little landed estate "fit in" -- to keep a lawn that requires chemicals and water, to keep cars that don't make you look like an intruder into the land of SUVs and Prii, to be seen as able to keep consuming the trappings of the carburban lifestyle (try not having a TV or homeschooling in Carburbia --- people will automatically assume that you are a religious fundamentalist fleeing the Enlightenment). As Bill Levitt, the first big Carburban developer said, "If you give a man a house he'll never be a communist -- he'll be too busy."

Before you know it, Carburbanits start opposing transit bonds with the best of them and demanding that "something be done" about all that traffic, something that doesn't involve endangering the massive investment that has been poured into creating these enclaves of the scared.

Yes, it's a very conservative-making place.

The 5% Project

by JMG at 11:01 AM on 23 Jan 2008

And one more thing...

...as you alluded to, suburbia makes it much more difficult to organize. It's harder to get a bunch of people in one meeting spot, there are less meeting spots in general, and you don't "bump into" people, which I think is one of the great organizing techniques.

by Jon Rynn at 11:13 AM on 23 Jan 2008

one consumer's behavior

Regarding...

"gasoline price increases and their effects on consumer behavior"

Once you have a house in a suburb or exurb or whatever, I suspect one has no choice but to stay there. As fuel prices go up, I reduce my spending on other things. (And our income has actually declined, without even considering inflation, over the past several years.) It would be next to impossible to sell our house right now, even if I wanted to. And the possibility of exhanging 1200 square feet and enormous lot for something smaller on a tiny lot, eye ball to eye ball with the neighbor, is not really appealing. Probably would not even be able to buy that much house in an urban area.

In for a penny... in for a pound. If anyone is contemplating moving to a rural area, think long and hard about whether you really want to and whether you are prepared to pay what you have to to stay there... or accept a big financial loss when you change you mind. I pity the fools... actually NOT... who built McMansions and won't be able to give them away when they've had enough of country living.

by wiscidea at 11:17 AM on 23 Jan 2008

Carburbia

JMG, there's another pressure on people in the suburbs to become more conservative, and that is the forced balkanization of the community. Within a city it's relative easy to walk to a park, a lake, a walking trail, a restaurant, a bus stop, a community center and the like, which exposes people to the shared nature of these entities. In a suburb you're flirting with death if you want to walk anywhere (most do not have sidewalks), which forces residents to create miniature versions of these resources.

This spawns a generation of people who eye anything shared as communism, as they're essentially mandated to purchase their own amenities. They CAN'T ride the bus or train, they CAN'T walk to the pool when it's hot out, their children don't have a park to play at unless they're driven there. So they must build or buy individual serving sizes of these resources or go without.

In the end, you get people who have forgotten or have never seen what a true, interconnected community with shared resources looks like. And that breeds a strong suspicion of those who would force such things upon them.

by PBrazelton at 12:53 PM on 23 Jan 2008

Tru dat

PBrazelton: Word

The 5% Project

by JMG at 1:26 PM on 23 Jan 2008

A Different Perspective

Regarding JMG's comments...

Please, though we often disagree, consider the following. This is not intended as a hostile response or a personal attack. I actually appreciate much of what JMG writes.

I realize automobiles are a problem. I realize that statistically speaking much of what JMG said might accurately describe suburbanites. I've worked with at least one person who fits JMG's description almost perfectly. But it would be nice to see some real survey results that support this view. I'm not an expert on this subject. I'm not familiar with the literature. My own views are based on personal experience.

(1) My concern for the environment grew enormously after I moved to a rural area and it continues to grow daily. I did not give much thought to endangered ecosystems before I learned I had one right next to my own home. I did not worry about the long-terrm effects of my chosen career until after I started taking care of that scrap of disappearing ecosystem. I have numerous neighbors, if you count people within several miles, who have gone through the same transformation.

(2) I interact not only with typical university inhabitants and other urban dwellers now, but also with ecologists, farmers, folks interested in restoring natural habitat, volunteers from different backgrounds who become involved in such activities, et cetera. I wasn't social to begin with, so this is sort of a big step for me. Never gave much thought to where my food comes from until I moved to where I live now.

(3) Fear of crime had nothing to do with moving out of urbia. Indeed, I feel a bit less safe where I live now. It is the sort of place where no one would hear you scream and your relatives would find your body a month later because no one missed you until you stopped returning phone calls. There a folks showing up at the door late at night because they are lost. There's a crystal meth problem in rural Wisconsin.

(4) There is no pressure to keep up with the Joneses where I live. It is, for the most part, live and let live. Individuality is not frowned upon but met with friendly curiosity. And our neighbors care about their town, their schools, and... oh... not EMS... they voted against a tax increase to pay for it. Oh well. That's democracy. There is a local watershed conservation organization. We might not want to pay for better EMS, but the town does contribute a portion of tax revenue to the watershed conservation organization.

(5) A town meeting reveals the variety of people living here. You see a mix of new pick-up trucks, old pick-up trucks, your basic Toyota sedans, a couple of big old Buicks, a mini-van or two, a few SUVs, a beat-up jeep, and, YES, a couple Prii. Voters consistently elect progressive candidates, but political views range from pro-development Libertarians to the most ecologically aware Greens. At one time, our town board consisted, which consists of only a few people, included a Green Party member.

(6) There is some concern about the traffic. A lot passes through to get to the town south of us, which actually permits new construction on ag land. Our town does not permit construction, not even a driveway, on ag land. Anyway... the local residents would like to sheriff to enforce the speed limit. That's all. They do not want wider or more roads.

As far as involvement in the community is concerned, I alerady mentioned I'm not a very social person and was not interested in community activity or political matters when I was living in urbia. Now I volunteer to help a local conservation organization, attend town meetings, follow what is happening in my "neighborhood". I've seen my neighbors in restaurants and stores 20 miles from where we live and they always go out of their way to say hello. I've never felt more a part of a community and concerned about that community's future.

That's all. I know... I'm weird. But then I live surrounded by equally weird people. It is possible for people moving to surburbia or beyond to retain and build a concern for the environment and community. I do not know where you found the description of a typical escapee from urbia and where the numbers supporting that description came from, but the description neglects the major exceptions -- entire communities of exceptions -- that are out there and the possibility of making the exception the norm.

I'll say it again... it might be easier to create responsible suburbanites and exurbanites than to take away their desire for personal transportation.

Peace.

Next stop... JMG's post encouraging everyone to get involved in LOCAL politics... he is absolutely correct!

by wiscidea at 3:11 PM on 23 Jan 2008

ADVERTISING POLICY

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