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EScroogeJr (< 20)

Americans get what they deserve

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March 05, 2008 – Comments (7)

Everybody is whining about prices at the pump. But America is not a resource-poor country like Japan. In fact, it is one of the most oil-rich countries in the world. So why is it that there never seems to be enough oil?

For the answer, look at the eastern outskirts of Los Angeles in the morning rush hour. Here's what the lanscape looks like. Miles and miles of empty open space with an occasional community of 50 single-story houses here and there. The terrain looks like a developer's dream, but it will stay empty forever. Baby boomers need high property values. Running through this open terrain is a highway that leads straight to the desert, and this highway is literally clogged with tens of thousands of cars trying to get to the downtown. Why would all these people live in the desert? Because the residential density in the near suburbia is too low to house the entire population. If you want to have one single-story house per square mile, the urban sprawl becomes inevitable. As a result, every day hundreds of thousands of people have to drive a hundred extra miles to get from home to work and then from work to home. This, in turn, means higher consumption of oil, faster loss of cars to wear and tear, higher road maintenance costs, steeper premiums for liability insurance, and thousands of hours of precious time wasted needlessly in driving every day from Victorville to Anaheim. Of course, what is true for Los Angeles is also true for any other big city. Los Angeles is just a good example of a community obcessed with property values and paying the cost in an indirect way, which incidentally, makes GDP statisticians delighted with all this unnecessary economic activity. Now, the domestic production of oil would cover most of the reasonable consumption, which would result in zero trade deficit and no need to worry about OPEC and fight stupid wars in the Middle East. But Americans have to drive more than any other nation on earth because their city planning authorities wouldn't let people live near where they work.  The high price of oil is just the price that Americans are paying for the high price of their houses.

$104 per barrel. Why is happening to us? Oh why?

7 Comments – Post Your Own

#1) On March 05, 2008 at 4:22 PM, AnomaLee (29.19) wrote:

I wrote a paper about the economic shifts in Americans and how Americans have began to flock to the suburbs in the past half century. That problem does lead to higher energy needs for transportation.

Look, I agree with you that a lot of this is self-inflicted. First crude oil is trading @ $104 because of measures outside the average Americans control that exceed supply vs demand. You have the policies of the Treasury Secretary and the FOMC for the weakening dollar to thank for that, and crude oil would likely be trading at $60-70 a barrel. 

However, we can point all day without solutions. The best solution we could impose immediately (<5 years) would be better energy efficiency to help offset future demand. The effects would benefit us more than the U.S. 'investing' in ethanol or not investing our tax revenue by just throwing it back to consumers like confetti.

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#2) On March 05, 2008 at 5:20 PM, charlesblazer (99.40) wrote:

Makes me appreciate living in Reston, VA -- a wonderful, beautiful, and brilliantly-planned community.  If you haven't heard of it, check it out:

http://en.wikipedia.org/wiki/Reston,_Virginia

I live in a good-sized home and walk to work.

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#3) On March 05, 2008 at 5:51 PM, EScroogeJr (< 20) wrote:

charlesblazer, some planned communities may be better than others, but I think it would be much better to get officials out of the planning business altogether.

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#4) On March 06, 2008 at 4:24 AM, charlesblazer (99.40) wrote:

I'm not sure what you would call an "official," but Reston was privately funded, planned, and developed, and it remains private today.  It is not a government locality (i.e., it is not a county, city, or town).  It is just a (large) private development in Fairfax County.

You could call Robert E. Simon and the directors and managers of Reston "officials" however.  If so, then I think they've done a great job, despite being "officials."

Your blog post about L.A. sprawl really highlights, in my opinion, the contrast between good and bad planning.  With bad planning, you get enormously wasteful situations like L.A. (and most of the U.S.).  But I believe Reston proves that good planning is possible.  When it works, it can be both aesthetically pleasing and efficient.  Many people live, work, play, and grow old here -- without needing to do it in four different places (and therefore not needing to sit in a car for so many thousands of hours of their lives).

Granted, I suspect that a noteworthy percentage of people living in Reston commute into DC.  They're likely either doing what they have to do or they're missing the point of a place like Reston.  The DC commute, from any direction, is probably as wasteful as the L.A. commute.

But speaking of wasteful commuting in America... DC commuters should get credit for at least one innovation that reduced the waste: slug lines!

http://www.slug-lines.com/

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#5) On March 06, 2008 at 4:52 AM, EScroogeJr (< 20) wrote:

charlesblazer, Reston proves my point. Whenever we have pockets of efficient planning, it's done by private capital. A mixture of officials and capitalists never works well.

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#6) On March 06, 2008 at 5:31 AM, StockSpreadsheet (74.41) wrote:

I think that America's overconsumption of oil goes back to a few things that are fairly specific to the U.S..

1)  We used to be one of the largest exporters of oil.  Due to this, the price was always really low, so we didn't have to worry about our fuel consumption in the past.  In places like Europe and Japan, most of the nations had very little oil, so oil was always very expensive, thus they have always had to conserve oil, leading to high gas prices and more efficient/smaller automobiles.

2)  America is a fairly new country.  A lot of our cities were built fairly late, many only really growing after the invention of the automobile.  (Victorville, Las Vegas and most of Los Angeles are examples of this.)  This allowed for urban sprawl that would have been unthinkable before the invention of the automobile.   Also, a lot of the European and Japanese cities go back hundreds of years, so they developed high population densities and mass transit systems.  In our older cities, like Boston and New York, that were built before the automobile, high density and fairly efficient mass transit systems are the norm, automobiles are less prevalent and urban sprawl is much less.

Largely due to these two factors, the American mindset was ingrained that we want single-family residences on fairly large land plots whenever possible.  Communal living, multi-generational housing and high-density development have been discouraged by our history and our media.  

I have also read that our litigeous society is also partly to blame.  In the past, if a customer of a developer was unhappy with something regarding the condo/townhouse that they purchased, the tenent would talk to the developer, who was a local company, and they would amicably resolve the issue.  Many years back, some of the developers went statewide or national.  Now it wasn't a local company that you could discuss your problems with, it was a statewide or national company, that told you to talk to somebody in their headquarters that was in another city if not another state.  As large companies are prone to do,  the large developers tended to blow off the complaining customer, hoping to bury them in hassles and red tape until the problem went away.  This pissed off the customer until some of them started suing.  As the lawsuits started getting results, more and more people saw that talking to the company got you nowhere, but suing the company got you some relief.  Therefore, they bypassed talking to the company at all and went straight to court.  

In a multi-family dwelling, if one tenent gets pissed off about something about their unit, they tend to sue the developer.  (Now oftentimes, this is due to shoddy construction and the developer deserves to be sued, but this is not always the case.)  That tenent could often get other people in the multifamily unit, (who weren't pissed off enough to hassle the developer too much over the problems they had in their uint), to join in the lawsuit, since then it is a class action and they individual that otherwise wouldn't have sued now doesn't have to shoulder all of the cost/time themselves.  This rapidly escalated the costs to the developer for the awards given the tenents for the percieved shoddy construction.  This developers started building more single-family units and fewer multi-family dwellings, as there were fewer class-action lawsuits that way and lower judgement awards.

I have heard that this problem is especially bad in California where I live, as Californians tend to be especially litigeous and our courts, (being more liberal), tend to rule in favor of the citizens more and award bigger rewards, costing the developers more.  It is for this reason that you tend to have fewer multi-family dwellings in California and have more urban sprawl.  I heard this on a news show where they interviewed several developers and asked them why they didn't build more multifamily dwellings in San Diego so that we could cut down on our traffic congestion.  The scenario outlined above was the response of the developers on why they didn't build more multifamily dwellings in San Diego County.

If America wants to cut its consumption of imported oil, the fastest way would be for  the government to levey a $2 - $3 a gallon tax on gasoline, raising our cost per gallon to $5 - $6 like it is in may other industrialized nations.  That would push Americans to buy more fuel-efficient vehicles, live closer to work, use mass transit more and be more concerned about energy usage.  It could also bring in quite a bit of money into the government to help offset the deficit, (with the rest of the shortfall being made up by budget cuts).  I don't see this happening anytime in the near future however, as it would be a big shock to our nation and a huge adjustment to our lifestyle and would tend to piss off the general public.  It might be one of the best things we could do however for the health of our nation and the planet.

Craig 

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#7) On March 07, 2008 at 12:29 PM, FleaBagger (33.30) wrote:

I work in Reston (and in fact I'm at work now--don't tell anyone), and I did not know that it's a privately planned community. That's pretty cool, especially compared to Loudoun County (a nearby, relatively socialist county where I live).

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