[This is an EXCERPT -- read or download the full report at Common Current. Compare it to the May 2008 report.]

1. Executive Summary

For the first time in history, the United States experienced in 2008 oil prices well in excess of $100 a barrel, with retail gas prices reaching near $5 a gallon in parts of the nation. Oil supply and demand, the desire for foreign oil independence, natural and manmade disasters, and pending climate change regulations all suggest a new paradigm in metropolitan design, mobility, economics and social behavior.

The effects of these recent changes in oil and gas prices and supply are now being realized through a variety of related data points and findings. Nationally, public transit ridership has increased more than 5% from 2007 to 20083, while telecommuting rates, and alternative forms of mobility including biking and walking have likewise recorded significant year-to-year increases.

High gas prices have resulted in sweeping economic impacts. Real estate values in low density, completely car-dependent exurban development—also known as sprawl—have plummeted in comparison to real estate values in central urban or higher-density suburban real estate served by public transit and walkable amenities, which have been holding their relative value.

According to a July 2008 Business Week study, many U.S. central urban areas have maintained real estate values while real estate values have declined significantly the further out one travels from the central city:
“Annual (real estate) price changes in most of the largest metro areas, including New York, Los Angeles, Chicago, Miami, San Francisco, Seattle, Baltimore, Washington D.C. and Philadelphia, followed a similar pattern: Values were most stable within a 10-mile radius of the center of the city, but generally worsened with each successive radius ring as far as 50 miles from the center of the city.”
In terms of this study of city preparedness for post-oil, seven of these nine metros referenced in the Business Week analysis ranked in the top ten cities in this study (the other two—Los Angeles and Miami ranked in the top 20), having relatively strong public transit, higher rates of mixed real estate uses, realistic opportunities for commuting on foot or by bicycle, and demonstrating relatively low or moderate development sprawl.

“Sprawl has become the biggest risk factor in real estate,” according to Jeffrey Norquist, President of the Congress for New Urbanism, in reference to the US housing foreclosure crisis of 2008.

Chicago’s Center for Neighborhood Technology, in conjunction with the Center for Transit-Oriented Development and the Brookings Institution, has modeled the impact of gas price increases on household expenses across 52 US metropolitan areas. Most metro area households had annual gasoline costs below $1,600 in 2000; by 2008 most of these 52 metro areas, with the exception of downtown areas well served by transit, walking and bicycling such as New York, San Francisco and Boston (where central city gas expenses remained below $1,600 annually), had average gas costs ranging from $2,400 to $3,800 and higher.

Oil availability or refined gas supply constraints have also impacted urban mobility. A single gas pipeline from the Gulf Coast, for instance, supplies many inland urban markets throughout the Southeast United States. The gas supply disruptions that occurred throughout Southeast U.S. cities including Atlanta, Nashville and Charlotte in the weeks following Hurricane Ike demonstrated the fragility of the concentrated US oil processing and gas supply system.

At the global level, the growing use of oil in developing nations, particularly in China and India, has put a strain on the ability of global oil suppliers to meet demand. Shell Oil has forecast that, “by 2015, growth in the production of easily accessible oil and gas will
not match the projected rate of demand growth.” The rapidly growing use of oil and coal in developing nations comes at the steep price, placing significant additional burdens of greenhouse gas emissions into the earth’s troposphere and stratosphere. According to Shell Oil, “remaining within desirable levels of CO2 concentration in the atmosphere will become increasingly difficult."

This study assumes the hypothesis that certain U.S. cities and metro areas are currently better prepared for oil price volatility--or potential oil supply disruptions--than others. Furthermore, cities or regions that have existing significant alternatives to reliance on oil
for transportation (and alternatives to oil for building heating and electricity generation) will prove more economically resilient if oil prices remain above $50 or $75 a barrel.

These metro areas will gain even more competitive advantage with any combination of higher-priced oil and ambitious global climate change regulations that are now being enacted or proposed.

An example of how climate change-related legislation will facilitate the growth of postoil cities can be illustrated by California’s Senate Bill 375 (SB 375), signed into law on September 30, 2008.12 SB 375 legislation requires that the state’s regions and their metro areas develop quantifiable “sustainable community strategies” to reduce potential greenhouse gases resulting from new development and associated transportation impacts, as measured by vehicle miles traveled. In effect, SB 375 requires development of housing closer to transportation in order to reduce fossil fuel use and thus better achieve the greenhouse gas reduction goals of the state’s 2006 Global Warming Climate Solutions Act (AB 32).13 SB 375 incentivizes denser, transit-oriented development with mixed real estate uses while providing disincentives for auto-dependent exurban or suburban sprawl. For communities that plan sprawled development, the new law reduces federal transportation funding and imposes more stringent and lengthy environmental review processes.

In terms of social behavior, using public transit and carpooling, or using alternative forms of mobility such as walking, biking, or telecommuting all help offset the need for exclusively relying on personal automotive transport, thus reducing fuel needs and greenhouse gas emissions. These city and metro mobility and communications factors for this study were measured using public data available through the US Bureau of the Census and other research institutes.

Clearly, the way in which cities and metro areas are planned and developed also has a measurable impact on fuel use, household transportation expenses as well as the degree of dependence on auto transport. Ranking data on the comparative sprawl rate of metro areas was included to determine such vulnerabilities.

Finally, the use of heating oil or use of oil to generate electricity in metro areas was analyzed to determine vulnerability to oil prices and supply shocks for non-transport related oil uses. It should be noted that in the United States, the use of heating oil or the use of oil to generate electricity is not used in most cities or metro areas, thus this ranking data was factored into the overall score but was not published as a separate category.

Only Boston and New York City use significant amounts of heating oil for buildings, though that amount is under 25% for Boston and under 10% for New York City of all heating energy used and is decreasing as a percentage of the whole; only Honolulu uses a significant amount of oil to generate electricity (as of 2006, almost 80% of the city’s electricity came from burning oil.)