Living and Working Energy

Jun 25th, 2008 | By | Category: Energy, Featured Articles, Transit

Adjusting to higher energy prices? You aren’t the only one.

The insanity of shipping even the cheapest goods around the planet, to save a little on labor costs, is finally being recognized as insane:

As the cost of shipping continues to soar along with fuel prices, homegrown manufacturing jobs are making a comeback after decades of decline. While it once cost $3,000 to ship a container from a city like Shanghai to New York, it now costs $8,000, prompting some businesses to look closer to home for manufacturing needs…

The rise in transportation costs are fueling what some economists are calling “reverse globalization.” For instance, DESA, a company that makes heaters to keep football players warm, is moving all its production back to Kentucky after years of having them made in China.

“Cheap labor in China doesn’t help you when you gotta pay so much to bring the goods over,” says economist Jeff Rubin.

Some local manufacturers have suddenly found themselves in the thick of boom times.

(ABC news)

And, according to the New York Times, this spells the end of the exurb:

Suddenly, the economics of American suburban life are under assault as skyrocketing energy prices inflate the costs of reaching, heating and cooling homes on the distant edges of metropolitan areas….
Across the nation, the realization is taking hold that rising energy prices are less a momentary blip than a change with lasting consequences. The shift to costlier fuel is threatening to slow the decades-old migration away from cities, while exacerbating the housing downturn by diminishing the appeal of larger homes set far from urban jobs.

Seattle Bubble disagrees:

Pretty much any way you slice it, the higher cost of housing close-in far outweighs any financial benefits you get by cutting your commute. Run the numbers for any pair of far-flung vs. close-in cities around Seattle and you’ll find the same thing.

By comparison, if that same family stayed in Marysville but sold their 20 MPG car and bought a used Prius that gets 45 MPG, they save nearly $200 a month (at $5/gallon), while the upgrade only cost about $10,000 up front. Heck, they could probably trade straight across for a used Saturn that gets 30 MPG and still save over $115 a month.

The picture is slightly better for first-time home buyers, since they’re comparing both locations at today’s prices, but it’s still not a financial win to go close-in. A potential first-time buyer with a downtown commute looking at putting $20,000 down on an average home in Marysville can expect to spend $2,400 on PITI + commute, vs. $2,850 in Shoreline. With $50,000 down it’s $2,230 vs. $2,780. That’s still $450-$550 a month more to live close-in, with the high cost of housing more than negating their gas savings.

While I like Seattle Bubble’s analysis, I must disagree with conclusion. The relative energy impact of living in an exurb goes far beyond the gas needed to putter out an additional ten or twenty miles each way, each day.

Consider how errands are done in the ‘burbs relative to an urban setting–trips to the bank, the grocery store, the bar, the movie theater, the daycare center and so on. Moving closer to the city center often means moving into a denser, more walkable neighborhood–where these resources are right at hand rather than miles down the road. If you can walk to your bank and your grocery store, you’re piling on the savings far beyond having a shorter commute each day.

Next consider the vastly higher energy costs to heat and cool an isolated structure, the energy and chemicals needed to maintain a vast lawn. Distributing utilities to widely dispersed homes is also costly–requiring more water pumps, more sewers to maintain, more garbage trucks driving more miles and more transmission losses on the sprawling network of electrical wires. Even when the homeowner is shielded from these costs, they still exist.

Driving until you qualify remains a false economy. By focusing on the costs of the commute, we miss the bigger costs of living in low-density sprawl. This is not to say we all must live in the very urban core of the biggest and most expensive cities. Well designed mass transit systems, like Metra in the Chicago area, allow this sort of density to form in smaller communities. All of this makes me want to say “I told you so” to those who killed the monorail and the light rail expansion.

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  1. Ha, I don’t get Seattle Bubble’s analysis but kinda agree with its conclusion. Maybe I missed something, but I wonder where the number $20, 000, and $50, 000 come from? National average? Regional forecast? How they justify the $450-$550 monthly difference?

    The city may find dense, mixed-use communities more desirable, but from a home buyer’s perspective, the higher cost of housing close-in may very well outweighs savings from cutting commute. Yes, distributing utilities to low density area is costly, but it’s government and developer’s money. Buyers don’t pay huge price difference per unit for utilities between urban and suburban areas. I guess for some people, more utilities for bigger houses is still fair enough.

  2. Dude. I totally respect Dear Science. But it would be easier to recommend you to friends and family if you knew how to set your site’s yearly clock.

    “Living and Working Energy: Published by Jonathan Golob on Jun 25th, 2007″

    Dude! It’s 2008!!

  3. Ha!

    It’s my hosting company 1&1. They kinda suck. I’ll bitch to ‘em.

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