Austin Contrarian

Let Texadelphia worry about food-miles

I certainly don't care if someone wants to eats locally grown food.  If you prefer local food because it is fresher or tastier, great.  If you enjoy shopping at the farmer's market, swell.  Prefer local varieties?  Happy hunting. 

The "eat local" crowd does a fair amount of moralizing, though.  They frequently suggest that we all ought to be buying locally-grown food.  How far our food travels evidently has become a moral issue.  By reducing our food-miles, the argument goes, we will reduce our fuel consumption.

But "food-miles" is the wrong metric.  The correct metric is the amount of fuel used to transport a pound of food (or some other given amount).  We don't care how far our tomato traveled; we care how much fuel it took to get it from there to here.

I'm skeptical that moving food even long distances has to use much fuel per pound.  For example, an 18-wheeler can haul 30,000 pounds of tomatoes 1,500 miles from Florida to Texas at 5 mpg.  That's a hundred pounds per gallon. At $4/gallon of diesel . . . I'll save you the arithmetic:  that works out to just 4 cents to move one pound.  You'll burn more fuel per pound making a separate trip to the grocery store for bread and milk.  You'll probably burn more fuel per pound just backing your car out of the driveway to make a separate trip for bread and milk.

I realize it costs a lot more than 4 cents/pound to move those tomatoes from Florida to Texas.  The trucker has to be paid, the trucking company gets its cut, etc.  But we're worried about fuel.  A pound of food can travel a long way on just a tiny amount of fuel. 

The food-milers make another mistake, perhaps one worse than fixating on the wrong metric.  They ignore the fact that lots of energy is used at every step of the soil-to-plate cycle.  Fertilizer.  Irrigation.  Tilling.  Harvesting.  Storage.  Processing.  Transportation.  Everyone knows that the recent surge in food prices was caused by the sustained surge in fuel prices (aggravated by the government's edict that we fuel our cars with food). 

This is an important reason not to worry about fuel miles.  It's actually very, very tricky to calculate the amount of energy used to get food from the ground to the market.  Growing conditions matter a lot.  Florida growers can grow 2 or 3 times or more tomatoes per acre than Texas growers.  Local growers thus start at a huge energy disadvantage unless they are using radical farming methods that use no energy (also known as "subsistence farming").  It's quite possible that they cannot close the energy gap despite their advantage in transportation costs.   

Because the cost of energy makes up such a large percentage of the cost of food, it makes no sense to minimize just one component of the energy cost.    You'll be apt to maximize something else.  Just look at the price.  It may not be a perfect indicator of your food's energy cost, but it is the most reliable indicator you've got. 

The geography of gasoline consumption

I've done some more thinking about the Glaser and Kahn paper I bogged about the other day.  Glaser and Kahn examine total energy use among major metropolitan areas in order to compare cities carbon emissions.  But their data also allow us to compare gasoline use city by city.  That's just as interesting a comparison, at least to me.

Glaser and Khan even allow us to make an apples-to-apples comparison because they have constructed a composite "median" household for each city to use as their points of reference.  For example, they don't use per capita gasoline consumption as their point of comparison.  They instead estimate the expected gasoline consumption of a hypothetical $62,000/year household with 2.62 members for each city, using survey data and (I assume) some fancy statistical techniques.

They report pounds of carbon emitted rather than gallons of gasoline consumed, but since they tell us how much carbon they assume one gallon emits (23.47 pounds), we can easily convert their data into gallons. 

Here is the relevant table from their paper:

Here is a chart I compiled from their data depicting relative gasoline consumption:

The thing that struck me when I looked at the numbers was the relatively small difference in gasoline consumption between Houston and most other cities.  (Third column.)  Glaser and Kahn's hypothetical $62,000/year household uses only 55 more gallons per year in Houston than in D.C.  It uses only 135 gallons more gallons per year than the corresponding Sana Francisco household.  The Houston-Chicago gap is only 118 gallons per year.

The gap between Houston and old-line northeastern cities (particularly New York) is larger, but is largely offset by their greater consumption of heating oil.  (Remember Hugo Chavez offering free heating oil to Boston's poor?)

This chart makes the point better:

There is no question that steep gas price hikes would hurt Houston (or Dallas or Austin) households.  At $3/gallon, the Houston household is already spending 5.4% of its gross income on gasoline.  At $4/gallon, it would have to spend 7.2% of gross income on gasoline, assuming no change in gasoline consumption.  But the Sana Francisco household is spending 4.8% of its gross income on gasoline, a figure that would rise to 6.4% with a $1 increase in the price of gasoline.  That 0.8% difference is smaller than I expected.

Glaser and Kahn also compare city and suburban gasoline use:

I summarize the corresponding gasoline consumption numbers in columns 5 and 6 of my chart, and compare suburban Houston households with central city residents elsewhere in column 7.  No surprise that the gap grows significantly.  But it is possible that, given their much higher housing costs, central city residents may be even more susceptible to price variations in commodities like gasoline.  Those suburban Houston households pay a lot less per square foot of housing than similarly situated households in LA, Sana Francisco or DC.

These simple charts don't tell the whole story, of course.  Gasoline consumption is not completely inelastic, especially over the long run.  One could argue that because residents of central cities have access to better mass transit, it is easier for them to substitute away from gasoline use, making their demand for gasoline more elastic than suburb dwellers.  Put simply, city dwellers can cut down on their driving more easily than suburbanites.

That's certainly plausible.  However, city dweller's access to better transit is already reflected in their lower gasoline consumption.  They've already picked the low-hanging fruit, so to speak.  The barrier to additional transit use is often not the difference in monetary cost, but the difference in time and convenience costs. 

Of course, there is some price at which drivers will begin to substitute to mass transit wholesale.  But the suburban drivers have options, too.  A Houston suburbanite who switched to riding the bus or carpooling would save (on average) more gasoline per commute than a central city resident.   Likewise, a Houston suburbanite who combined two errands would save (on average) more gasoline per errand. 

This is ultimately an empirical question.  Like everyone else, I think gas prices are headed up, at least over the next few years.  It will be interesting to see the relative adjustments made by Houston drivers and those in the more compact northeastern and western cities. 

Relative elasticities aside, the numbers are still interesting, especially the aggregate metropolitan area data.  I never would have guessed that a "typical" metropolitan Houston household uses only 5 more gallons per month than its metropolitan D.C. counterpart.

One final point.  There is one area where western and northeastern cities wipe the floor with us, the denizens of the hellishly hot places:  Electricity.  We use fiendish amounts of the stuff.  (There's archaeological evidence that Austin was inhabited before the invention of air conditioning, but some scholars dispute its conclusiveness.)  If electricity prices shoot up like gas prices, we will suffer a lot more than our friends out west and up north, and there'll be nothing we can do about it. 

The geography of carbon dioxide emissions

Economists Ed Glaeser and Matthew Kahn have written a new paper estimating the differences in carbon emissions across different metropolitan areas.

Using a hypothetial household with 2.62 members and $62,000 in average yearly earnings, they attempt to calculate how much carbon dioxide this household would emit in a given metropolitan area.  They estimate household emissions from driving, public transportation, home heating and electricity (which includes air conditioning), and they factor in the relative cleanness of the region's electricity supply.   

Their findings are not all that surpising:

• "Per capita emissions generally are lowest in Western metropolitan areas and highest in Southern ones.  Metropolitan areas in the Northeast and Midwest fall in between these two extremes."
• "All told, if the social cost of one ton of carbon dioxide emissions is $43, then the annual environmental damage associated with an additional home in greater Houston is more than $500 greater than the damage for a new home in greater San Francisco."

Car-dependence obviously plays a large role, but often not as large as electricity consumption:  The typical Houston MA household emits 3,000 more pounds of CO2 per year from driving than does the typical San Francisco household.  But the typical Houston household emits 23,000 more pounds per year than the SF household due to extra electricity use.  As we all know, air conditioning is expensive. 

Their tentative conclusion is that perhaps we should make it easier for households to move from Texas to California, rather than vice versa:

This work is far too preliminary to be a sound basis for particular policies.  However, it does emphasize the contradictions of current American land-use policies.  Local land-use restrictions cannot stop development in the nation as a whole.  They simply have the ability to move development from one area to another.  Our current land-use restrictions tend to stop development in those areas, like California, that are environmentally friendly and to encourage it in areas, like Texas, where households produce more carbon dioxide.  Within metropolitan areas, land use restrictions often push development out towards the urban fringe where energy use is highest.  Our results do suggest that it makes sense to look for policies that would encourage building in more enviornmentally friendly cities and discourage it in areas that have the greatest carbon dioxide emissions.

A level playing field for cities

Urban economist Ed Glaeser argues that cities should get a level playing field:

Does the special role that cities play in the economy and society mean that cities need special treatment from state and national governments? No. Cities are strong. Give them a level playing field and they can compete robustly. However, cities shouldn't have to face a policy deck stacked against urban living. Urban firms and residents shouldn't have to pay a disproportionate share of the taxes needed to care for disadvantaged Americans. Suburbanites shouldn't get a free pass on the environmental damage created by a car-based lifestyle.

How are city residents unfairly taxed? For centuries, cities have disproportionately attracted the poor. In the 2000 Census, 19.9 percent of city residents were poor; only 7.5 percent of suburban residents lived in poverty.

Urban poverty does not reflect urban failure, but rather the enduring appeal of cities to the less fortunate. Poor people come to cities because urban areas offer economic opportunity, better social services, and the chance to get by without an automobile. Yet the sheer numbers of urban poor make it more costly to provide basic city services, like education and safety, and those costs are borne by the city's more prosperous residents. Taking care of America's poor should be the responsibility of all Americans. When we ask urban residents to pick up the tab for educating the urban poor, then we are imposing an unfair tax on those residents. That tax artificially restricts the growth of our dynamic cities.

I'm one of Glaeser's big fans.  He's exactly 83.4 times smarter than I am.  Still, I disagree with the italicized sentence.  Urban residents who heft additional tax burdens should be getting value in return.  If they aren't, they have the option of exit (except for the transit-dependent poor).  The higher costs should be capitalized into property value.  Lowering tax burdens would likely just make the fixed supply of urban property more valuable.  Tyler Cowen puts it better:

If there is any unfairness, maybe it is toward the people can't afford to live in desirable cities but would like to.  If we lower the property tax burden in cities, rents will rise and this problem will become worse rather than better.  The more general point is that urban land owners, not all residents, benefit disproportionately from good policy changes.  Urban improvements have unfair distributional effects by the very nature of city land.

Here's my two cents:  Adjusting the relative tax burdens and pricing externalities is not really a matter of fairness to urban residents.  But "anti-city" policies such as free roads and high tax burdens do deflect growth from the cities to the suburbs.  They dampen city growth or, worse, trigger a spiral of decline.  And that's a bad thing because of all of the positive things cities generate.

Our pro-suburban policies may not be bad for city residents, but they are bad for cities.

High taxes hurt dyslexics

Taxes aren't really my thing, but I can't help passing along this anecdote about my mom:

My mom is 67 and ostensibly retired.  She taught elementary/middle school for several decades and specialized in teaching children with reading disabilities.  (She has a masters' degree in education.)  When she retired, she decided to supplement her income by teaching children with severe learning disabilities.  She took an intensive course in dyslexia and hung out out her shingle.

She now has 10 students.  Some are severely dyslexic, which means they will need years of therapy.  She's always been a great teacher and is evidently doing a good job now, because she's constantly getting asked to take on new kids.

She charges $25-$30 an hour or something like that, which is the going rate for this kind of therapy.  But each session takes a lot of preparation, so her effective rate of compensation is closer to $15/hour.

Still, that's pretty good money for a retired person, right?

But hold on.  Thanks to her social security benefits and a slightly better teacher's penson, she has just edged up into the 25% marginal tax bracket.  She also has to pay 15% self-employment tax -- to pay for her benefits when she retires.

A 40% marginal tax rate.

It's worse than that, though.  Because she makes more than the social security administration thinks is prudent, she must now pay taxes on $4,000 of her social security benefits.  Altogether, she has a 50% marginal tax rate on her teaching income.  Her effective rate of compensation is somewhere around $7/hour.

She was surprised by her tax bill.  She's done the calculation.  She doesn't want to work 15-20 hours per week for $7-$8/hour; after all, she's supposed to be retired.  So next year she plans to scale back to the five students with the most serious problems.  It's not worth it financially to do any of this, she said, but she feels like these five really need her. 

When economists talk about the deadweight loss from taxes, this is what they mean.  No one benefits when my mom scales back from 10 hours to 5 hours -- she loses out, five of her students lose out, and the government won't see one thin dime from the 5 sessions that would have been. 

There's always been a lot of handwringing from some about the distortionary effects of high marginal tax rates for the wealthy, but I've always thought the high marginal tax rates for the lower-income distort the market even worse.  (Not to mention the unfairness of it all -- I make a lot more than my mom, but my marginal tax rate is much lower.)  The 15% self-employment tax is crippling to those who want to go out on their own.  And I can't think of a more boneheaded retirement system than one that forces the retired to be even more reliant on meager social security payments.

Addendum.  I ought to say something about my idea of a fair tax system.  Here it is: 

(1) Eliminate the social security/employment tax.  Period.

(2) Eliminate taxation based on family income. 

(3) Give every taxpayer a standard $20,000 deduction, with progressive marginal tax rates after that. (Combined with (1), someone making $20,000 or less would pay no federal tax.)

(4) Eliminate the mortgage interest deduction.

(5) Impose a carbon tax, which would generate a huge amount of revenue, allowing reductions in income taxes, while pricing the externality generated by carbon use.

(6) Include employer-provided health care benefits in taxable income.

(7) Restrain the growth of social security somehow, perhaps by bumping up the retirement age by a year and reducing the COLA.  But don't count social security benefits when calculating income for the retired; i.e., soften the blow by letting them supplement their income without penalty.

Like I said at the beginning, I'm no tax wonk.  I don't know whether this would be feasible.  I'm sure it's not policitally feasible.  It certainly seems fairer to me, though.

Recycling newspapers vs. burying them: Which is better for global warming?

Austin's zero-waste program got me thinking about this one.  I'm not sure the answer is as obvious as people think it is.

Recycling newspapers clearly uses less energy than making newsprint from virgin pulp.  A lot less energy -- perhaps 40% less.  If all we had to worry about was the energy involved, the equation would be simple to solve.

But we also have to account for the carbon absorbed by trees.

Most people think saving trees is the main advantage of recycling newspapers.  But people are worried about the wrong trees.  The trees that matter aren't the ones that are cut down, they're the ones that aren't planted. 

A lot of the trees that are cut down for pulp are specifically grown to be cut down.  Tree farm owners expect a return on their investment in the land; they aren't in the business of providing free carbon absorption.  If they don't get a good enough return on the timber, some of them will switch to a different use.

Take Landowner Larry.  Larry's just clear-cut 500 acres for pulpwood, and he's trying to decide what to do with his land.  Larry ordinarily would replant his 500 acres with saplings then sit back and wait 40 years for another big payday (or sell to someone willing to wait for the payday).  But Larry's noticed the BIG PUSH to recycle newsprint; the experts predict demand will be cut by, say, 40% in 40 years.  Larry's worried about that.  Forty years is a long time to wait for a big payday when the payday might not be so big.

Larry's land just happens to be good for farming, too.  Corn especially.  Larry can read the newspaper, and knows the government is pushing a loony policy to encourage American farmers to plow under as much land as possible for biofuels.  Billions of gallons of ethanol per year, or something like that.  Larry decides he's better off renting his land to farmers.  They can make a bunch of money growing ethanol, which means he can get a better return than he expects from growing timber.  (We can also imagine Larry instead selling to a developer, who will grow houses and roads and strip malls.)

Our carbon emissions have taken a double whammy.  We've lost 500 acres of carbon-sucking saplings and we've replaced them with 500 acres of carbon-spewing farmland (or suburbs).  Sure, our push to recycle newspaper has saved some trees in the short term, but with the likely consequence that timberland will be converted to farmland or housing.  (I know that some timberland can't be put to alternative uses -- for example, land deep in the middle of a national forest -- but we're hypothesizing a timberland owner who is on the bubble.)

I'm not sure how to calculate recycling's net carbon benefit once lost timberland is taken into account.  For starters, it's hard to tell how much timberland will really be taken out of production; a 10% decrease in the price of timber (caused by slackening demand) does not necessarily mean a 10% decrease in the amount of timberland under cultivation.  In other words, I don't know the price elasticity of the supply of timberland.  I do know, though, that the price elasticity will rise as the value of farmland rises.  Simply put, our government is doing all it can to incentivize timberland owners to convert their land to farmland.  Some landowners will respond to the incentives, and will do so even more quickly if they expect the long-term demand for their trees to slacken.

Since I don't know how much timberland we will lose by depressing the demand for trees, I don't know whether we will emit more or less carbon by recycling most of our newsprint.  It is possible that recycling saves so much energy we can ignore trees.  But that's not obviously true -- one acre of trees can absorb as much as four tons of carbon per year, which is a lot of carbon.  And that's before we've taken into account the extra carbon generated by the alternative use of the land.

Note also that as energy becomes greener, recycled newsprint's carbon advantage over virgin newsprint will shrink.  Considering the (likely) declining benefit and the growing appeal of alternative uses for timberland such as farmland, our optimal long-term carbon strategy may be to induce an increase in the demand for timber. 

This isn't to knock Austin's zero-waste program.  Newspapers take up a lot more landfill space than plastic bags.  As long as the city's cost of recycling newsprint is less than the cost of buying landfill space for newsprint, then the city ought to move toward a zero-waste program.  The carbon calculation looks intractable, though.  Too intractable for the city to be confident that recycling newprint will do anything for global warming in the long run. 

If you thought Kyle was bad . . .

try Sunnyvale, an eastern suburb of Dallas.

It faced a lawsuit similar to the one pending against Kyle.[1]  Here's the federal judge's description of Sunnyvale's set-up:

Nestled in the midst of towns defined by the shopping malls and dense apartment development for which the Dallas Metropolitan Area has become famous, Sunnyvale presents a stark contrast. It is a beautiful, rural, Texas town with almost 11,000 acres of rolling hills and green grassland and only 2,000 residents. Sunnyvale has no shopping malls and no apartment developments. The secret to Sunnyvale's success is its unusual zoning laws, including an outright ban on apartments and a one-acre zoning requirement for residential development.

The judge ruled that Sunnyvale's zoning had a disproportionate effect on African-Americans.  More damning, he ruled that the city had adopted the regulations with the intention of discriminating against African-Americans.

The judge was probably persuaded by citizen comments like this one, made at a zoning hearing on the town's first proposed multi-family project:

We'll build that fence up, we'll hold that gate there and as long as we can hold those Indians off, fine.  And, when they bust through then we pay the price . . . there's an over abundance of multi-family housing around here and we're not like that.  But, we're boxed in . . . personally, I'd rather not see any apartments or any cottage homes in Sunnyvale.  Period.

I've discounted the possibility that Kyle was actually motivated by race.  I suspect that's unlikely with fast-growing suburbs because they're less likely to be racially homogeneous.  But obviously, if the plaintiffs have turned up hard evidence of discriminatory intent, Kyle will be in real trouble.  The hit to its reputation would dwarf any impact on its zoning authority.

[1]Dews v. Town of Sunnyvale, Texas, 109 F. Supp.2d 526 (N. D. Tex. 2000).

Kyle's all-masonry housing ordinance has landed it in court

Here's a thought-provoking case:  The Home Builders Association of Greater Austin Inc. and the National Association of Home Builders Inc. have teamed up with the NAACP to sue the City of Kyle. 

In 2003, Kyle passed ordinances that increased the minimum lot size for single-family homes by 200 square feet, to 6,825 square feet; set a minimum of 1,200 sq. ft. for single-family houses; and mandated masonry exteriors.

Kyle officials say the ordinances were designed to slow growth in the wake of a spurt that has sent the city's population skyrocketing — from 5,314 in 2000 to 23,285 in 2007, according to estimates from the Texas State Data Center. The rules followed development moratoriums after sewer and water systems became overburdened.

"The passage of the ordinances that are at issue here today was just one more step that the city took once the development moratoriums were lifted in order to address those growth issues," Kyle's lawyer Bradford Bullock said.

The homebuilders and NAACP (strange bedfellows indeed) aren't buying it:

The trio of plaintiffs say the rules violate the federal Fair Housing Act because African American and Hispanic home buyers have been disproportionately pushed out of the local market.

"They raised the bar on every single district within the city," Michael Klein, one of the lawyers representing the plaintiffs, said in his opening arguments. "What they did was basically say, 'We're going to increase the cost of living in Kyle.' "

Klein is absolutely right.  Kyle is dead set on increasing the cost of housing there.

This is not necessarily an expression of bigotry, though.  Kyle is arguably attempting to cure a market failure, although clumsily.

A city like Kyle, which has no commercial or industrial base to speak of, can only fund its schools, parks, police and other city services with residential property taxes.  All of the homeowners have the right to share equally in these services -- the kids go to the same schools, everyone gets the same police and fire protection, etc.  The homeowners don't pay equal shares of the cost, though.   The more expensive the home, the bigger the homeowner's share.   

Duh.  That's always the case.  But a town like Kyle has plenty of undeveloped land.  That creates a problem for homeowners who want the town to provide a high level of service.  (Say, a well-funded high school someday.)  They can vote to fund high-quality services, but that makes the town more attractive to potential residents, including lower-income residents.  If the town attracts enough low-value construction, the new growth might actually lower the average property tax per household, thereby reducing the money available per capita to spend on services.   

This poses a dilemma for the original homeowners:  If they want to maintain the high-quality services they were initially willing to fund, they will have to raise their taxes because the city's per capita collections will no longer cover the bill.  If they don't want to raise taxes, then they must cut services, which is obviously a second-best solution.

The residents of Kyle have settled on a third option:  They have imposed what is essentially a minimum property tax by requiring that new homes have a minimum value.

I'll wager Kyle's attorneys don't put it this way in court.  I don't have a problem in theory with cities offering different levels of services, though.  When there are lots of suburbs offering lots of variety, home shoppers can pick the city that suits them best.   (Urban economists call this Tiebout sorting, after economist Charles Tiebout, who proved that fragmented suburbs could generate efficient levels of government under certain conditions.)

Zoning is a pretty clumsy tool, though.  Minimum lot sizes, home sizes and all-masonry construction all impose tremendous inefficiencies of their own.  Among other things, they reduce the options available to prospective homeowners who are willing to pay for the services but who don't want the standard suburban set up.  It would be much more efficient simply to charge an impact fee to cover the homeowner's share of fixed costs.  That's hard to do under Texas law, though.

I've also got a problem with using zoning to cartelize the supply of housing to push up the current residents' land prices.  That shouldn't be the case in Kyle, though.  There's lots of land around Kyle, and no natural amenity that makes the land in Kyle more attractive than in another town.  The citizens of Kyle, in other words, don't have the market power to raise their land value through zoning (as opposed to the structure value).

None of this addresses the lawsuit's claim, which is that Kyle's ordinance has a disproportionate impact on minorities, which is almost certainly true.  That's not the end of the analysis, because the law tolerates some facially-neutral ordinances even when they have a disproportionate impact.  If Kyle loses, enjoy the ensuing firestorm.  I imagine even Austin would end up getting scorched.

Rural subsidies

This ought to be cause for celebration:  New York state is closing some low- and medium-security prisons because it doesn't have enough felons:

On Jan. 11, the Spitzer administration announced plans to close Camp Gabriels, two other corrections camps and a medium-security prison, all of which have been operating below capacity since 1996 because of a decline in the number of nonviolent felons, the state’s corrections commissioner, Brian Fischer, said.

Closing those prisons, Mr. Fischer said, would save the state millions of dollars, free up money for the treatment of sex offenders and mentally ill inmates, and finance programs like anger management and vocational training, meant to prepare prisoners for their release.

But New York has used prisons as a kind of rural subsidy (as has Texas), which has left some little towns hooked on prison jobs and prison labor.  For example, "Camp" Gabriels, one of the prisons slated to close, employs 136 people in sparsely populated Franklin.  Predictably:

[s]mall businesses have staked their survival on the prison workers who patronize their stores. Local governments and charities, meanwhile, have come to depend on inmate work crews to clear snow from fire hydrants, maintain parks and hiking trails, mow the lawns at cemeteries and unload trucks at food pantries. . . .

“All those services, when you put that into dollars, there’s no way we’d be able to hire people to perform them,” said Mary Ellen Keith, supervisor of the town of Franklin, which relies on the crews to cut overgrown brush from the sides of 67 miles of local roads, among other tasks.

The locals, prison workers and unions are organizing a campaign to save the prisons.  It's only a matter of time before they figure out that the solution is to increase the demand for what they're selling.  Mete out stiffer sentences for recreational drug users, for example.  Jail parking ticket scofflaws.  Or just criminalize can-kicking.

Is the end of sprawl in sight?

Eduardo M. Penalver in yesterday's Statesman:

With credit tight and the demand for housing drying up — sales of new homes fell last month to the lowest level in 12 years — new construction in the exurbs is grinding to a halt. The result is a decline in the building industry's appetite for rural land on the urban edge. The question is whether that decline will last. In the past, a sudden drop-off in demand for housing in the exurbs would have represented merely a hiatus. Builders would have bided their time until the housing market recovered, and the outward push would soon have begun again. But persistently high gas prices may mean that the next building boom will take place not at the edges of metropolitan areas but far closer to their cores. When gas costs less than milk, people are more willing to drive 20 miles each way to work every day, burning a couple of gallons of gas in the process. But as gas prices climb, long car commutes become a rising tax on exurban homeownership, and the price people are willing to pay for homes in remote areas will fall.

Increasing gas prices might not be enough to cause people to move, which is why demand for gas proves so inelastic in the short term, but it can influence where people choose to live when they are forced to relocate for other reasons. As the New Urbanist News recently reported, during the present downturn, accompanied as it has been by high gas prices, homes close to urban centers or that have convenient access to transit seem to be holding their value better than houses in car-dependent communities at the urban edge. A recent story in the Minneapolis Star Tribune blamed flagging growth in the Twin Cities' outer suburbs on rising gas prices. If prices at the pump continue to increase, as many analysts expect, the eventual recovery of demand for new housing may not be accompanied by a resumption of America's relentless march into the cornfields.

"Gas prices will kill sprawl" is the conventional wisdom, but I think it is almost certainly wrong.  I don't dispute that rising gas prices will have some effect on the amount of new suburban construction, but I think the effect will be relatively small.  Penalver's dramatic prediction is wishful thinking, not the result of clear-eyed analysis.