Washington DC, May 27, 2008 --  

High fuel prices may lead to a long period of decline for America's sprawling suburbs.

"I can't believe it -- it cost $136 for a tank of gas,'' fumed the driver of a gimungus Yukon Denali before he drove off from the service station in the western exurbs of Baltimore. Sitting in my tiny Mazda Miata on a rare Saturday driving trip from my urban home, I only had to buy a few gallons to halfway fill my little tank. My wife described my smug satisfaction as shadenfreude -- the common feeling of pleasure at the misfortune of others.

But that wasn't it -- at least not all of it. My feeling of satisfaction was based partially on righteous distain for a wasteful suburban lifestyle, with a dash of vindication after years of being bullied on the road by drivers of these enormous vehicles. And the Yukon Denali was one of the worst of the worst. The Department of Energy estimates that it can travel only 12 miles per gallon on the city¹ -- no doubt because of its immense weight of 7400 pounds.²

Could gasoline breaking the $4 per gallon barrier be the event that kills the SUV and take with it America's love affair with the suburban lifestyle? There are some indications that could signal the leading edge of such a trend. Smaller cars are selling briskly while SUVs sit on the dealers' lots, pushed out the door only with the help of dealer-subsidized fuel at $2.99 per gallon.³ Mass transit systems are struggling to add capacity to cope with record ridership.⁴ And a new study shows that housing price declines have been much more severe in communities on the fringes of the suburbs compared with those closer to the urban core.⁵

Though strong, these indicators may actually understate the change in attitudes that have for decades fueled suburban growth. Economists have long known that both housing and fuel prices are extremely inelastic -- meaning that swings in price have relatively little impact on people's willingness to buy or sell. In the case of fuel prices, people have little choice but to pay what is charged at the pump, because alternatives like switching to a smaller car, or moving to a new home can take months or years to implement. In the case of real estate, homeowners' reluctance or inability to sell at a loss often leads them to stay in a house for years after they would have otherwise moved.

The reality is that both SUVs and the suburbs have enormous momentum that will take decades to exhaust. Even if automakers stopped production today, consider that there are already millions of SUVs on the road with average useful lives of 10 years or more. What is to happen to these vehicles if gas prices continue to rise? Their value will drop, to be sure, but they will still remain in use for many years -- probably concentrated in the hands of urban drivers who drive fewer miles.

In the case of the suburbs, this momentum is even more powerful. The typical home lasts for 50-100 years or more. Low-density suburban developments -- the kind that give residents no choice other than to get around by car -- have accounted for the vast majority of new home construction in America since at least 1945. No matter what urban idealists think, these suburbs aren't going away anytime soon. Somebody is going to live in them.

If gas prices continue to rise, suburban home values will likely continue their drop, and the residents will be forced to pay an ever higher percentage of their incomes at the fuel pump at the expense of other consumer spending. Meanwhile, more affluent folks will flock to glitzy cities where they can be liberated from the declining fortunes in the increasingly run-down sprawl. Think of the decay of the cities between 1950 and 1980, with the vacant lots, riots, and boarded-up buildings, with the location of the mayhem being moved to the suburbs. This is not a pretty picture -- even for those who prefer urban life.

Of course, many things could halt this vision of suburban decline. Though unlikely, fuel prices could yet drop significantly as they did after the last gas price spike in the 1970s. Slightly more likely is that suburbanites will embrace mass transit, despite the necessary inefficiencies of its service to low-density areas. More likely still is a change in America's corporate culture to fully embrace telecommuting on a widespread scale, lessening suburbanites' exposure to high fuel prices.

But even if all these things happen, it seems unlikely that sprawling suburbs and SUVs will ever regain the level of prominence in American culture seen through the early years of this decade. There is a certain element of fashion to the way people live -- once a lifestyle has lost is luster, it is a tough case to bring it back. And with fill-ups costing $100 or more, the lifestyle of the sprawl is looking ever more tarnished indeed.

Who Will Kill the SUV?, April 8, 2006

Promoting Obnoxious ?Burbs, June 15, 1999

1. Department of Energy, Fuel Economy Guide, as posted May 27, 2008

2. Car and Driver, 2007 GMC Yukon Denali - Short Take Road Test, April 2006

3. Business Week, Gas Gimmick From Chrysler, May 5, 2008

4. Washington Post, Stung at the Pumps, More Hop on a Bus, May 27, 2008

5. Cortright, Joseph, Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs, May 2008