Suburban Slums?

In February and again in April I posted about the threat to the future of the suburbs caused by higher energy costs, so I felt vindicated by an article in Thursday’s NYT business section taking the same view. (“Fuel Prices Shift Math for Life in Far Suburbs”) According to Moody’s, real estate prices in the suburbs are declining faster than in city centers. The article quotes urban land use expert Christopher B. Leinberger, writing in The Atlantic Monthly that “many low-density suburbs and McMansion subdivisions, including some that are lovely and affluent today, may become what inner cities became in the 1960s and ’70s — slums characterized by poverty, crime and decay.”

With oil recently hitting a new high, and with carbon taxation or trading almost certain within the next few years, I see every likelihood that the trend in fuel prices will continue upwards (though of course there may be temporary dips) unless and until we actually start using a lot less of it.

Meanwhile I am 3 weeks into life in central London, where the population density is such that I can reach almost anything I want on foot and where an abundance of public transport makes the occasional longer journey a breeze. I realize not everyone can live here, but most cities in Europe offer good public transport and America is going to have to follow. According to the NYT article, the average suburban household in America already spends over $3000 a year on gasoline; as this increases the incentive to move inward will increase and the value of the suburban property will decrease.

My message as before is to get out of the suburbs while the getting’s relatively good.

Yesterday I expressed my disbelief that the White House could ignore an EPA report merely by refusing to open the email. Let’s put a little more flesh on the bones of the story. Over a year ago the Supreme Court ruled that the EPA was wrong to refuse to regulate greenhouse gases as had been demanded by a number of States, led by California. (The EPA had said it had no mandate to do this since CO2 is not toxic and therefore was not a pollutant in the normal sense.)

More recently, the Department of the Environment ruled that Polar Bears were an endangered by the loss of habitat due to global warming, which should have required the EPA to act. Apparently the EPA has rather reluctantly agreed that it has a duty to regulate greenhouse gases, and has made some proposals in a report emailed to the White House, but the White House won’t open the email. This strikes me as childish in the extreme, and it is hard to credit that this is happening in the USA and not in a Banana Republic or a Gilbert and Sullivan opera.

The same group of States and environmental groups has petitioned the court to force the EPA and the administration to act quickly on the Supreme Court decision of April 2007, but this petition was rejected by a Federal Court of Appeals yesterday. I do not know the next step on this, but presumably it could go to the Supreme Court. It seems to me that we might as well just wait out the remainder of the Bush term and be ready to move ahead in January.

Speechless in London

I am left speechless by a report in the NYT that the White House refused to open an email from the EPA because they didn’t like what it said. Best to read for yourselves:http://www.nytimes.com/2008/06/25/washington/25epa.html?_r=1&emc=tnt&tntemail1=y&oref=slogin

Fuel Cells vs Plug-In Hybrids

The Economist this week has a section on energy and an editorial suggesting that electricity is the only practical solution for transport. They discount hydrogen due to the high cost of providing the infrastructure.

Undaunted by this potential problem, Honda has announced the start of production of its FCX Clarity sedan, powered by Honda’s own hydrogen fuel cells. The car will initially be leased to selected customers in California. Just five cars will be delivered in July, with 200 planned over the next three years. Clearly this is still in the experimental stage, but equally clearly Honda is very committed to the technology. It has a dedicated factory in Japan and a dedicated service center in California. The car itself is a stylish 4-door sedan with a range of up to 280 miles, much more than appears likely from batteries for some time.

Of course, its overall carbon footprint depends upon how the energy to create the free hydrogen is produced -- and therefore could ultimately be zero -- but just based upon energy usage the Clarity is rated at the equivalent of 74 miles per gallon. Apart from the lack of infrastructure, production cost seems like the biggest problem. Honda expects the price to come down to under $100,000 once volume production starts, but this is still way beyond most budgets. My bet is that technology advances – for example, storing hydrogen in some kind of nano-structure instead of having to compress it -- will reduce the price further.

By contrast, others such as GM, Toyota, and Renault/Nissan are backing plug-in hybrids, but only a fool would count Honda’s fuel cell solution out.

Duke Energy

Jim Rogers, CEO of Duke Energy, is the subject of an interesting article in Sunday’s New York Times magazine. With the objective of eliminating CO2 emissions from electricity generation by 2050, one of his ideas is to install solar panels on customers' roofs free of charge. This presupposes that if he were to buy these in bulk the price would come down enough to make it economically viable, but I am not sure that’s the case. Inevitably however new technology and/or carbon pricing will bring the price down to economic levels within a few years. To read the whole of this interesting article see http://www.nytimes.com/2008/06/22/magazine/22Rogers-t.html?_r=1&emc=tnt&tntemail1=y&oref=slogin

Cheap air fares and holiday homes.

Settling into the London apartment and noticing that British TV seems obsessed – even now – with real estate investment. There was a program last night about investing in apartments in Montenegro. Breathtakingly beautiful as it was, it seems to me that the investment potential depends upon two things: the continued desire to vacation in hotter climes; and the continued bargain prices of European air travel. Seems to me both are doubtful. Investing close to where people work makes more sense to me; hence the London apartment.

The Price of Oil

I have been “off the air” for some weeks due primarily to the time it has taken to get broadband in the London flat which will be my summer home, but also due to being sick. I woke up this morning to the sound of Malcolm Wicks (UK Minister for Energy) explaining why going to Jeddah to discuss oil prices was not only worthwhile but also consistent with the government’s commitment to reduce Britain's use of fossil fuels. I cannot say it made a lot of sense, but with demonstrations in various parts of Europe about high fuel prices, and discussion on both sides of the Atlantic about reducing or removing fuel taxes, a politician must pander. (To his credit, Obama has not called for a “tax holiday” though he stopped short of giving the real reason.)

The truth is one might as well protest about the color of the sky. The market is sending us a message; our reliance on fossil fuels is unsustainable, and the only way we will see prices go down is if we use less. And as the Asian countries increasingly meet their populations’ legitimate aspirations we in the west who can best afford it need to set an example by using much less. As for fuel taxes, this would be a good time (for a suicidal politician!) to increase taxes; in the current supply/demand scenario the money would come almost exclusively out of the producers’ pockets, leaving the consumer price unchanged. Producers would have reduced incentive to develop ever more costly sources of oil, while the extra tax revenue could be used to encourage energy efficiency and clean energy.