Monday, November 17, 2008

A Resilient Suburbia 2: Cost of Commuting

In the second post in this series on suburbia and peak oil, I’ll consider one of the threats that peak oil poses to suburbia: the increasing cost of commuting to and from work for suburban residents. My conclusions may surprise readers: suburbanites aren't particularly vulnerable to the rising cost of gasoline. Instead, like all of us, they are vulnerable to general economic shocks that may be caused by peak oil, but the elasticity of their commuting budgets may better position them to deal with these shocks than urban residents.

The first thing that comes to mind when people discuss peak oil and suburbia is the massive amount of gasoline used to commute to and from work. I think this is also the least problematic. However, to the extent that it is a problem it won’t result in the abandonment of suburbia—rather, it will act as a catalyst to reshape the economic structure of suburbia.

For the purposes of this article, I’ll discuss the hypothetical suburban commuter who drives 10 miles to and from work 22 days each month. I realize that many suburbanites drive farther than this, and that some drive shorter distances, but it’s an easy number to work with. Here’s a graph of what that commute costs each month at varying prices of gasoline and vehicle MPG figures:

Not very scary, is it? It’s important to remember that most suburbanites drive more than just to and from work, that most suburban families are two-income/two-commute families, and that there are more costs of commuting than just the gasoline (auto depreciation, parking, etc., though these don’t generally increase with increasing gasoline costs). So let’s make a more extreme, scary, and arguably realistic graph. Here’s the cost to a family that drives two cars 40 miles each per day, plus 48.5 cents per mile (the IRS business deduction) as an approximation of cost of car-ownership, plus $10 per day for parking for each commuter, plus $100 for insurance for both cars (that’s $1394/mo baseline plus the cost of gasoline):

There’s a number of take-aways from these graphs: 1) these numbers are higher than average cost of commuting, 2) to the extent that they’re accurate, commuting is VERY expensive, 3) the majority of the cost of commuting is the base cost, not the gasoline, 4) for most suburbanites, the ability to afford life in suburbia is more a function of the shape of the overall economy (e.g. the earning power of suburbanites) than it is a function of gas prices in isolation.

What are the options to commuting? First, looking at the graphs above, it should be clear that eliminating a suburban family’s need for one of their two cars will have a greater effect than doubling the miles per gallon of both of their cars. There are many ways to do this: ride sharing, mass transit, and telecommuting are the most obvious.

Ridesharing (Carpooling): For all the talk about improving vehicle efficiency, there are few solutions that are simpler, more elegant, and more practical than putting more than one person in each car. For our hypothetical suburban family in the example above, if the happy couple can drive to work together and only maintain, insure, and park one car, they would save $697 after-tax dollars per month--and this is assuming no reduction in car-miles driven. Similarly, workers can organize car-pool clubs, etc. The downside of ridesharing is inconvenience. It’s convenient to only go straight from your house to work and not pick anyone up along the way. It’s convenient to pick when you commute. It’s convenient to have access to a car while at work in case you need to run an errand, etc. If, for our hypothetical family above, they can afford $32/day and the convenience gained is worth more than that, then it probably makes financial sense to drive alone (ignoring environmental arguments, etc.).

Mass Transit: Mass transit is another option for most suburbanites. Again, the viability of mass transit is a matter of weighing the cost savings against the inconvenience. In some cases, mass transit may actually be more convenient, but for most suburbanites it 1) takes longer, 2) is less flexible, and 3) doesn’t address the “last mile” and still requires one car (and its associated costs) per commuter.

Telecommuting: Working from home, one or more days per week, is another approach to making suburbia viable. This is already a common practice, and the ability to expand upon it has been explored here before.

I sense that, at this point, many readers will be a bit baffled by my focus on the base cost of commuting rather than the variable cost of commuting caused by higher gas prices. This is, after all, an article about peak oil and suburbia. I think it’s critical to focus on this differentiation—-the base cost of commuting vs. the variable cost.

If the variable cost (as gasoline gets more expensive) of commuting is what will kill the finances of suburbanites, then urbanites will be far better positioned to adapt to the impact of peak oil. They don’t have these long commutes, they often don’t have a need to own one car per family, let alone 2+. However, if it’s the base cost that is the primary issue (as I argue here), then we need to envision the scenario where suburbanites can no longer afford this base cost. This is even more true to the extent that America’s auto fleet gradually improves in efficiency (a topic I have largely ignored).

As long as suburbanites maintain their present income levels, they should be able to afford their present costs of commuting--in most cases rising gas prices won't break the bank, and can largely be addressed through improved efficiency. However, a sharp economic downturn has the potential to dramatically reduce these income levels. Here’s the key: a sharp economic downturn will most likely reduce urbanites’ income levels by a similar amount. So while these economic troubles may make life in suburbia much more difficult, it will also make life in urban areas much more difficult. Precisely because the issue is base cost of commuting, not variable cost, this economic impact is felt equally in suburban and urban areas. In fact, because there are so many viable (if inconvenient) options for suburbanites to reduce base commuting costs (outlined above), it may be easier for suburbanites to adapt to a sharp economic downturn than urbanites. Cutting down from two commuter cars to one could cut a suburbanite's total expenditures by 10-20%+ per month without great change. That's a large chunk of suburban budgets that is quite elastic, and lends a great deal of resiliency to suburbanite finances. How many urban households can cut expenses by this much merely by doing something as simple as carpooling?

My purpose in writing this series is not to make a partisan stand in favor of suburbia. Rather, my intent is to push the debate beyond “suburbia sucks” to the more important question of how we will address its weaknesses. As I argued last week, it isn’t practical to think that we’ll simply abandon suburbia in favor of some preferable urban option. This week, my conclusion is that suburbia may actually be no worse situated to deal with the economic impact of peak oil than urban areas. It is the base cost of commuting, not the variable cost, that most impacts suburban finances—-suburbanites have already (by definition) budgeted for this cost, and have more viable options to reduce this cost than urbanites have viable options to comparably reduce their expenditures. Next week I’ll argue that suburbia may be more than on equal footing with urbia—-it may actually be better positioned to deal with the more extreme potential impacts of peak oil such as food shortages, water shortages, and energy shortages.


Eadwacer said...

Under certain circumstances, park-and-ride carpooling can be made easy. In the DC area, particularly the Pentagon, there is a central destination and relatively few suburban catchment basins. Workers line up outside the Pentagon and cars stop to pick them up. What drives it is the use of HOV-4 lanes on the freeways. If you can get a carload, you can save time, which is just as good as money. On the other hand, having a second car that sits in a lot in Dale City all day doesn't help your costs much.

Jim said...


will the whole series be going up at the oil drum? i thought the comments on the first installment were quite stimulating.

Jeff Vail said...

The series will also be posted at The Oil Drum. Here's the link to this installment at TOD (with over 200 comments). I don't know whether the next two installments will appear here first or at TOD--I just put the post in their queue and they put it up when it works int their schedule. #3 will go up here this coming Monday, and #4 the following Monday.

Rice Farmer said...

A nice second installment. One thing, though, is that I can't help wondering what assumptions you are working under with regard to the economy. If the current economy somehow keeps chugging along, even though in a semi-crippled state, then I think this scenario is a viable one, at least for a while. I've been telecommuting for 20 years, and it sure does save on gas and car expenses! But I think we are at a crossroads here. I think we have to assume, or at least allow for a high probability, that lots of would-be telecommuters (not to mention those who commute by vehicle) will simply not have decent jobs, or any jobs at all. Will credit again become available for farmers to farm, for shippers to ship, for truckers to truck, and manufacturers to manufacture? And if the economy somehow does "take off" again, then we can safely assume that the prices of oil and other commodities are going to take off again.

So, at the least, I think it would be interesting and perhaps valuable to also explore how suburbanites might try to create viable local communities with their own micro-economies. What will they do about food, water, energy, and sanitation? These supplies and services might well not be available to all suburbanites. It's not just a matter of how much it costs them to commute, but how soon the economy deteriorates to the point where they can no longer depend on even things like public utilities. After all, it's just a matter of time.

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Labandibar said...

The cost of living in suburbia is not limited to commuting costs. Suburbanites' overall transportation costs are higher. Heating and cooling costs are higher. Suburbanites spend more taking care of their homes. Maintenance costs such as lawn mowing, snow removal, landscaping, and home repair are all higher.

Furthermore, I don't agree with your argument that environmental costs can be left out of the equation. What is the cost of carving up fields and forests into quarter-acre parcels of grass dominated by huge resource-hogging single-family homes?

What are the aesthetic and cultural costs of erecting miles of parking lots,strip malls and shopping centers?

The fact is, no society can sustain a mode of living where each person uses more than their fair share. Suburban living is not sustainable in the long run.

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