Tuesday, April 22, 2008

America's transportation systems and housing are changing radically.

Low priced oil is a thing of the past. Here's what that means:
  • Long commutes from distant suburbs to work are over.
  • Long distant travel by car will become rare. So will short trips by air.
  • Commuter Rail is going to be used a lot more in cities and between nearby larger cities and
  • Rail will replace a lot of long distance trucking.
Are you ready?

Here it is. The reaction to long commutes and high gasoline prices.
Morning Edition, April 21, 2008

Economists say home prices are nowhere near hitting bottom. But even in regions that have taken a beating, some neighborhoods remain practically unscathed. And a pattern is emerging as to which neighborhoods those are.

The ones with short commutes are faring better than places with long drives into the city. Some analysts see a pause in what has long been inexorable — urban sprawl.
Gas prices may drop a little in the future, but we'll never see dollar-a-gallon gasoline again. Hour long commutes one way to work in good traffic add to the cost of suburbs. Put this together with the clear fact that oil prices are not going to drop significantly. Demand is increasing and supply is becoming more expensive to obtain if it is there at all. Also, the overvalued dollar will continue to drop against the Euro, the Yen and the Chinese Renminbi. Even if the price of oil remains constant world wide, it will increase in the U.S. because of the declining value of the dollar. What does the fact that house prices closer to city center aren't dropping as much as oil prices climb tell us?

City centers are coming back. The cost of transportation in both price and hassle is climbing and won't go down much. America will adapt by encouraging people to live closer to the city center for work and encouraging greater use of public transportation, particularly rail.

Detroit is building the wrong type vehicles to survive. Add to this the fact that fuel prices are making airlines as they are currently structured and priced completely unprofitable. The resulting mergers will eliminate whatever price restrictions that competition has enforced on them, so air travel is going to jump in price and become a lot less popular. Boeing and Airbus are going to be designing new aircraft that can operate profitably in a market characterized by $100 plus dollars a barrel.

As more concentrated cities come back, we will see a sharp increase in demand for rail transportation, but rail will not be sufficiently profitable to operate without subsidies. Cars aren't either - gasoline taxes and other subsidies ore necessary to pay for the building and upkeep of roads. The four options looked at by the CBO in 2003 were:
  1. Eliminating federal subsidies and shutting down service;
  2. Ending national service and focusing instead on passenger rail's strongest areas (relatively short, densely populated corridors, such as the Northeast and parts of California);
  3. Keeping national long-distance service as it is today but upgrading the corridors; and
  4. Substantially improving Amtrak's entire network through a major increase in funding, with a view to giving rail a much bigger role in transportation between U.S. cities.
Option 1 is dead. Rail travel is not going to be shut down. Subsidies will continue and increase.

Option 2 becomes more viable, not only for what were considered densely populated corridors, but for others previously considered less densely populated. Cities that had not considered rail are going to be looking at it seriously. Of the largest ten metropolitan areas in the U.S., five (all in the sun belt) became large since WW II and do not have rail nets. That will change. Texas has Dallas-fort Worth, Houston and San Antonio withing 250 to 300 miles of each other, and the price of air travel will strongly encourage intercity rail.

Option 3 depends on whether the airline industry can create a business model and obtain new, more efficient aircraft that again becomes profitable for travel between cities inside the U.S. that are not on the two coasts. Where rail was viable out to about 300 miles one-way, that distance will sharply increase. The price of oil and the efficiency of aircraft will determine what that new distance will be, and rail is going to move out to any viable destination in the new limits. That also means that high-speed commuter rail is going to become viable inside the U.S. Expect the airlines to fight this. Southwest Airlines killed intercity rail between Dallas-fort Worth, Houston, San Antonio and Austin several years ago. The won't go quietly.

Option 4. By now this is a given. Rail is coming back, both for passengers and for cargo. Passenger travel will become a lot more popular for longer distances, and rail is going to replace trucks for long distance cargo runs.

The automobile, powered by cheap gasoline and augmented by the Interstate Highway system, created much of the lifestyle that we presently consider to be typical America. Cheap gasoline made it possible. Now cheap gasoline is gone, and there is no viable replacement. Reagan killed Jimmy Carter's research on alternatives, remember? (Typical short-sighted conservatism.) America's life style is changing sharply and doing so very quickly.

Anyone who doesn't want to be roadkill in the changed America needs to plan for it and quickly act on those plans.

No comments: