Friday, July 13, 2012

Furr'n Earl

One of the reasons I haven't posted much in the last couple weeks is because I'm buried with my day job. I'm in the middle of working on some environmental stuff including air quality and crime. Yesterday, as I was tracking down sales data on leaded gasoline*, I stumbled across a report on the US Energy Administration's (part of the DoE) website on "dependence on foreign oil". What a curious claim. It got me thinking... in what sense could US citizens be considered "dependent" on any good or service?

In the case of petroleum, the American city (with one or two exceptions, perhaps) is a decades-long project in exurbanization. Zoning laws, tax incentives, urban renewal, housing restrictions, rent controls, public housing initiatives (I recently watched a not-too-shabby documentary on the Pruitt-Igoe disaster in St. Louis) all contributed to an average workday that includes close to an hour behind the wheel every single day (US Census, 2009). Given this state of affairs, the BATNA for most Americans is unappealing. It's low-status to live in most urban centers (though this general rule has quite a few exceptions) and almost unheard-of to cluster co-workers into a single community. The US is a nation of single-owner automobiles, but does this necessarily imply that its citizens are dependent on foreign oil? Why not apportion some of the credit to the elite interests that shaped the American suburb?

In the short term, the extant physical capital of the US has to be taken as fixed: we have the houses, the churches, the schools, the fire stations, the roads, the streetlights, and the sundry other bits and bobs of daily life that are already here. We are "dependent" in the sense of extremely high short-run opportunity costs. However, as we all know from Econ 101 (or 301 if you're not using the Cowen-Tabarrok text like you should be), time makes prices relatively more elastic. People can search and substitute. Instead of living 20 miles outside the city center, developers can build attractive multi-family units in downtowns, cities and counties can ease zoning restrictions, allowing more and closer Wal-Mart type stores near (projected) population centers.

To the extent that this stuff is or isn't happening, I suggest to you that America is considerably more dependent on suburban living than on foreign-produced oil. Given that the US dealt with the oil embargo in the Carter administration and that we've had more than three decades to move back into the cities, I think it's not unreasonable to claim that OPEC is a paper tiger that we don't really care about except to bubble, froth and spit at from the political stump or the academic lectern. In the long run, we're no more "dependent" on foreign oil than on foreign shoe leather.

America is dependent on foreign cashews. Alert the press.

*For those readers too young to remember, from about 1925 to the rise of the catalytic converter in 1975, cars ran on fuel containing lead. This lead entered the atmosphere as part of the exhaust. There appears to be reasonable evidence that this lead contamination contributed to some of the crime wave that prompted the screenplay to Robocop.

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Do you have suggestions on where we could find more examples of this phenomenon?