Effects of gas prices revisited

In a follow up to an earlier post there have been interesting anecdotal evidence and thoughts on the long run effects of higher gas prices:
1. From Chris Wheelan, the Naked Economist:
1. Dump the McMansion.
There's been so much wreckage across the real estate market that we've neglected likely trends. The ironclad law hasn't changed; it's still "location, location, location." But the definition of a good location is certainly different if gas is $4 a gallon -- let alone $6 or $8.

Those giant houses 50 and 60 miles from the metro core now have three strikes against them: 1) Low-density development is rarely near public transit; 2) The resulting commute by car is wickedly expensive; and 3) The whole point of living that far from a metro area is to get a bigger house, which is now more expensive to heat and cool.

Other neighborhoods will emerge as a lot more attractive. We'll hear real estate agents say things like, "And you can walk to the train station." Americans might even develop more of a taste for condos and apartments. Nothing lowers the utility bill in the winter quite like having a common wall on two sides and heat wafting up from the apartment below.

2. Firms might begin to make business location decisions based on the commuting costs of their workers.
Suppose you're considering two jobs: One is in a building three blocks from the commuter train station, and the other is in an office complex 21 miles away from anything except cornfields. How is that decision affected by $6 gas?

In 1989, the retailer Sears closed its headquarters in the Sears Tower, a Chicago skyscraper, and moved 5,500 workers to a lower-cost campus in suburban Hoffman Estates, 30 miles from downtown and virtually inaccessible from most parts of the region by public transit. That kind of thing just isn't going to happen as much anymore. Sure, firms will still be looking for low-cost real estate, but they usually need high-quality workers even more -- and mandating long, expensive commutes is a good way to lose scarce human capital.

3. If you add it all up, the next several decades will be relatively good for cities -- at least compared to the last half century.
Part of this is driven by more expensive gas, as described above. But there are other forces at work, too. Worsening traffic congestion will make long commutes more costly in terms of time, not just money. Many aging baby boomers will seek urban culture and entertainment offerings (and more diverse housing choices) as they find themselves "empty nesters." Violent crime -- often one of top reasons for fleeing cities -- has been falling steadily for more than a decade. Both Chicago and New York City had the fewest number of homicides in 2007 than in any year since the mid-1960s.

The suburbs are not going to shrivel up and die. They tend to be lovely places, and most urban areas still haven't managed to cobble together decent public schools for middle-class families. But for the first time in a long time, basic economic forces will favor density over decentralization.

2. Richard Green's Blog on Urban Economics
People often wonder why European densities are so much higher than US densities. Part of it is history (Paris and London largely developed before automobiles); but part of it is that Europeans have been paying high prices for gasoline for a long time, and that they have had transit as an alternative. That said, the dynamics of European cities has been toward sprawl--central Paris has been losing population to its suburbs for the past fifty years.

I am wondering whether the rise in urban density will result in more convenience Mom-Pop grocery stores. I noticed them in Paris and to some extent New York but not in Washington DC. Will there be fewer box stores? Perhaps not - I'm reminded of some sit-coms where the characters need to find someone with car or mini van so that they can go shopping in the suburban malls/Home Depot.

And finally,
3. Brutal commutes:
The Metro Orange line has been a mess all week -- several serious delays, and terrible overcrowding even when the trains are running. When I got to the station yesterday morning, the platform was so crowded that they had to stop the escalator to make sure no one was pushed onto the tracks. And the air conditioning in my car seems to be dead, so I'm soaked in sweat by the time I get home. It's only taking a little longer than usual, but it's really taking the stuffing out of me. The scary thing is that it's only going to get worse if the price of gas makes more people switch to the train.