Increasing Gas Costs...

...are just beginning to take place according to this article:

Goldman Sachs said $175 a barrel crude "represents the price level required to maintain trend economic growth against our anaemic supply growth forecasts, assuming growth in the U.S. [economy] re-accelerates early next year.”

Late last month, Matthew R. Simmons, chairman of the Houston-based investment bank Simmons & Co. International, actually predicted that oil prices could climb as high as $378 a barrel – characterizing current prices in the $100 range as “preposterously cheap.”

To underscore his point, Simmons told the Arabian Business news service that in the United Kingdom capital of London, gasoline can sell for as much as $9 a gallon. And even that doesn’t deter motorists from driving their cars.

Prices at that level don’t “seem to have slowed anyone down. It works out as much as $378 a barrel. Yes [I can see it reaching that high]," he told the news service.

Just last week, the International Energy Agency (IEA) warned last week the era of cheap oil had ended. In fact, only a sustained global recession could send oil back down below the $60 a barrel level for any length of time.

Consumer Preferences in a...

...soft real east market. That's the focus of this story from the NAHB's e-newsletter:

ven in the depths of the current cyclical housing downturn, consumers continue to be interested in housing and home builders can tap into that potential by paying careful attention to home buying preferences, according to two experts on market trends who presented their latest research findings at the International Builders’ Show in Orlando last month.

Emerging as a strong draw for consumers this year is anything “green,” a market force that has been gaining strength with the continuing rise of energy costs, according to Gopal Ahluwalia, NAHB’s vice president of research.

“New home buyers are most influenced by greener choices that include energy-efficient features and equipment-based energy saving features,” said Ahluwalia. “They are also very interested in exterior features, such as a front porch, deck or patio in the rear, and exterior lighting. In addition, laundry rooms and dining rooms are widely considered to be essential in new homes.”

Slumburbia?

That's the new term coined by this article:

Slumburbia? After decades of middle class flight from the cities in search of safe neighborhoods and good schools — a flight that continues today even from gentrified cities like San Francisco — it's hard to conjure the image of a truly derelict suburbia. Will all those manicured lawns sprout weeds and broken bottles like a Baltimore back alley? Will drug dealers take over the local cul-de-sac? Will squatters set up camp in the neighbor's McMansion?

All this seems unfathomable, but it's the prediction du jour for some urban planners who make it their business to track the larger sociological implications of our land use.

Ouch.

Blogging from Taos, New Mexico...

Sunday and Monday of this week I'm here in Taos, New Mexico conducting public work sessions on their SmartCode effort.

By the way, if you ever make it to Taos, this is a fantastic place to stay.

Daily Sprawl Prediction

Okay, mark today's date (March 13th) down as when Daily Sprawl made this prediction:

The ongoing ethanol/bio-fuel fiasco is about to drive food prices into a hyper-inflation mode like we've never seen in our lifetimes.

Here's the deal...in a desperate attempt to salvage the auto-centric sprawl system that is endemic to this country, the government is increasingly turning to food-derived fuel now that oil continues its quick trot toward $150 per barrel.

The insanity of this trend is that every ounce (much less gallon) of food-derived fuel decreases the availability of that food for eating.

In other words, vehicular consumption replaces human consumption.

That's right--repeat the above statement three more times and pause to think about it.

.....

.....

Okay. Hopefully that little exercise clarifies things a bit. Namely, that this is crazy, ridiculous decision-making.

Do we really need to drive so much that its worth inflating the cost of almost every type of corn or grain-reliant food? Bread. Milk. Eggs. Cereal. Poultry and Beef.

Frankly, this trend only furthers to cement what is shaping up to be a real Nero-complex for this country.

You can mark this prediction in ink.

Why Isn't OPEC...

...raising production in light of increased prices?

This expert has a simple answer: because they do not have the capacity to do so.

The cartel not only doesn't have excess capacity, but--in several prominent cases--they don't have the capacity to meet their own permissible quota.

Troubling.

Are You Addicted?

"Green Coast"

Smart Coast--a smart growth advocacy group based in South Alabama--is presenting a new seminar on Green Building issues.

They always do a top notch job with their events so we recommend this one in advance.

Click here to find out more.

Michigan's Governor Recommends...

...smaller schools:

Gov. Jennifer Granholm will propose in her State of the State address Tuesday a plan to spend $300 million on as many as 100 smaller, more personalized high schools to replace larger schools whose students are doing poorly and have high dropout rates.

The plan is based on the idea that smaller is better. High schools with about 400 students are more manageable, students can get more individual attention and the principal knows everybody in the building, Granholm administration officials said.

Funding for the proposal would come from bonding against the $32 million a year the state sets aside to pay off a special-education settlement with local districts. The last payment on a portion of that settlement will be made this year, so the state would continue setting aside that money to pay off the bonds for this program, to be called the 21st Century Schools Fund.

Sprawl and Food Costs...

The idea that "everything has an oil cost" is more true than ever when it comes to food. The cost of oil-derived fertilizers and the cost of oil-driven transportation are too of the biggest ones related to what we eat.

So, now that oil is creeping toward $105 per barrel, should this really surprise us?:

American families, already pinched by soaring energy costs, are taking another big hit to household budgets as food prices increase at the fastest rate since 1990.

After nearly two decades of low food inflation, prices for staples such as bread, milk, eggs, and flour are rising sharply, surging in the past year at double-digit rates, according to the Labor Department. Milk prices, for example, increased 26 percent over the year. Egg prices jumped 40 percent.

Escalating food costs could present a greater problem than soaring oil prices for the national economy because the average household spends three times as much for food as for gasoline. Food accounts for about 13 percent of household spending compared with about 4 percent for gas.

Rising food prices can be particularly corrosive to consumer confidence because people are so frequently exposed to the cost increases. "It's the biggest risk we face economically, and it might be the thing that does us in," said Rich Yamarone, director of economic research at Argus Research Corp. in New York. "There's nothing really worse than having a job, making money, and forking most of it over just so you can have the same amount of food. You're running in place, and it really weighs on you."

As with energy, higher food costs cut into discretionary income that buys everything from cars to computers to movie tickets and drives the consumer-based US economy. Falling home values and a faltering stock market have battered consumer confidence, spurring a retrenchment in spending that is contributing to recent job losses and pulling the economy toward recession.

Many analysts expect consumers to keep paying more for food. Wholesale food prices, an indicator of where supermarket prices are headed, rose last month at the fastest rate since 2003, with egg prices jumping 60 percent from a year ago, pasta products 30 percent, and fruits and vegetables 20 percent, according to the Labor Department.

Matt Simmons, one of the world's leading oil industry gurus, recently gave a nice and concise primer on "Peak Oil" while appearing on CNBC's Fast Money.

See the video here.

World Made By Hand Update...

The official website for World Made By Hand is now live with some interesting features including a short video vignette of the book.

p.s. The website's background music perfectly sets the tone of the book. Well done.

How is the Home Building Industry...

...responding to the current housing situation?

This article discusses a panel session from the recent international builders show in Florida. The panel focused on how homebuilders can survive the downturn.

Overall, there were some good and some bad ideas. However, it was heartening to see several builders recognize the need for smaller houses in more dense (though not necessarily high density) arrangements.

Why BioFuel is Such...

...a stupid approach to high oil cost:

For those anxious to assign blame, the U.S. biofuels industry has made a particularly juicy target. With US$6 billion worth of annual subsidies going into the ethanol industry, critics say, the dream of making America more energy independent has inverted an equation that held for millennia — namely, that you increase food production by putting more energy into it (in the post-industrial age, energy means tractor fuel and nitrogen fertilizer). Now, farmers are being blandished with government money to convert food into energy. Pimentel, the Cornell agricultural scientist, has dubbed it the "biofuel boondoggle": fully 20 per cent of the U.S. corn crop went into creating ethanol last year, yet it provided only one per cent of the country's fuel needs. "So it's not making us energy independent at all, and it's driving up the price of everything else," he says. "You're taking corn away from feeding livestock, and sure enough, here in the States, the price of meat, milk and eggs has gone up 10 to 20 per cent. The price of other grains that you can use as substitutes is going up, because they're in short supply, too."

Read the whole story and remember--this is not some wacko, survivalist website but, rather, a mainstream publication.

This is important information to consider.

Anti-Sprawl Legislation...

...from one Oklahoma legislator:

A Tulsa lawmaker has authored a bill that he hopes would limit urban sprawl by offering financial incentives to agricultural owners to preserve their farmland.

State Rep. Lucky Lamons would rather farm owners donate their land to a conservation easement than sell it to developers. His bill would allow for a tax credit of half the fair market value of the land.

The cap would be set at $100,000 initially, then jump to $250,000 in 2011. The credits could be sold to a corporation for a cash benefit or used as a tax credit.

New NPR Series on Land Use and Sprawl...

A new high profile NPR series called "Shifting Ground" recently debuted.

The first story considers a Nevada community where rural life and suburban sprawl crash headlong into a lawsuit involving noise ordinances and a donkey.

Curious? So were we.

So, we listened and...now look forward to future stories in this exciting series...

Daily Sprawl Recommended Reading...

Daily Sprawl just finished Jim Kuntsler's latest book--World Made By Hand. It's a fictional follow-up to his groundbreaking The Long Emergency.

In short, the book considers (again, fictionally) what one upstate New York community might face if The Long Emergency played out.

Overall, the story is well-written with an interesting set of characters interwoven with a backstory involving a post-oil United States--one where even the trains and power have essentially stopped functioning.

While the book takes The Long Emergency to an extreme that even Kuntsler doesn't suggest is a likely reality, World Made By Hand is a must read if these issues matter to you.

Another Entry into the Daily Sprawl...

"Hold On Tight, Things Are Getting Rougher" file:

Gasoline prices, which for months lagged the big run-up in the price of oil, are suddenly rising quickly, with some experts fearing they could hit $4 a gallon by spring. Diesel is hitting new records daily and oil closed at an all-time high on Tuesday of $100.88 a barrel.

The increases could not come at a worse time for the economy. With growth slowing, high energy prices that were once easily absorbed by consumers are now more likely to act as a drag on household budgets, leaving people with less money to spend elsewhere. These costs could exacerbate the nation's economic woes, piling a fresh energy shock on top of the turmoil in credit and housing.

Here's the whole story.

More:

"You're adding an oil shock on top of a crunch on credit and a housing collapse," said Nigel Gault, an economist at Global Insight. "Even the U.S. economy cannot withstand all of that at the same time."

What's the significance of this? Well, there's alot--one of the major ones being that it will become increasingly important to live in a neighborhood where you can walk to meet some daily needs like recreate, worship, socialize, and even buy basic sundries like milk and bread.

Levitt Goes Bankrupt...

...one of the poster children of suburban sprawl has historically been Levittown.

Guess what?

The Levitt company has now gone bankrupt.

Photo courtesy of www.CDC.gov

Surburban Slums?

According to this article, the so-called advantages of suburban (sprawl) living may begin to disappear pretty quickly:

If gasoline and heating costs continue to rise, conventional suburban living may not be much of a bargain in the future. And as more Americans, particularly affluent Americans, move into urban communities, families may find that some of the suburbs’ other big advantages—better schools and safer communities—have eroded. Schooling and safety are likely to improve in urban areas, as those areas continue to gentrify; they may worsen in many suburbs if the tax base—often highly dependent on house values and new development—deteriorates. Many of the fringe counties in the Washington, D.C., metropolitan area, for instance, are projecting big budget deficits in 2008. Only Washington itself is expecting a large surplus. Fifteen years ago, this budget situation was reversed.

A New Form of "Redlining"?

That's what this article suggests:

In an effort to stem the bleeding, mortgage firms have instituted a bunch of new policies, one of which has drawn pretty heavy criticism from consumer advocacy groups and some in the lending industry itself. They call it new "redlining". It all started when Fannie Mae in December announced that from mid-January on it would require an extra 5% down payment from loans originated in declining areas. A declining, or high-risk, area could be an entire county, a metropolitan area or a zip code. Since last summer Fannie Mae has been labeling certain areas as declining and now it urged banks to use practically any available statistics to do their own risk assessments. Several national lenders have followed that advice and promptly stirred up the controversy.

Peak Oil Update...

Bloomberg Headline: "Oil at $100 May Look `Cheap' Within Five Years, Alfa Bank Says"

Read the story here.

This one, too.

Congressional Efforts

This NYT article discusses several Congressional efforts under consideration to deal with the housing mess. Notably, all of them seem somewhat too complex for their own good.

After all, do we really need a new federal agency to deal with this?

Anyhow, we'll keep you updated on legislative efforts to fix what some are beginning to think might be an almost unfixable situation:

Bank of America, which is in the process of acquiring Countrywide Financial and has potentially huge exposure, has circulated a proposal to create a new federal agency that would buy vast quantities of delinquent mortgages at a deep discount and replace them with fixed-rate federally guaranteed loans.

The bank warned that tightening credit conditions were leading to “escalating levels of delinquency and default among borrowers” and “an unprecedented number” of homes that would enter foreclosure.

Administration officials have given the Bank of America plan a cold reception. But the idea is similar to one proposed by Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Senate Banking Committee.

Bankrupt Cities?

While not unprecedented, the possibility of entire cities going bankrupt is an ominous reminder that even government bodies have solvency realities:

Broken street lights will not be quickly fixed, overgrown trees will not be trimmed unless they are unsafe and new development reviews may be delayed.

Those are some impacts of proposed cuts to Vallejo's public works department.

A draft fiscal emergency plan calls for maintaining a bare minimum of municipal services in public works, planning, human resources, economic development and other city divisions.

Released last week, the draft plan may undergo substantial revision before the City Council votes on it Tuesday. A city solvency plan is dependent on police and fire unions agreeing to pay cuts and reductions in minimum staffing levels.

Drastic cuts in city services are required to plug a $6 million general fund shortfall. Top city officials say the city is slated to run out of money by the end of April, and Vallejo may need to file for bankruptcy. All $4 million in general fund reserves have been spent.

Could an Unexpected Beneficiary of...

...the housing situation be...law school clinics?

The WSJ law blog thinks that might be the case:

Ever since the economy started slowing down several months ago, the Law Blog has tracked how the sub-prime crisis and the credit crunch have affected the legal market — from layoffs to litigation. But a recent article in the Daily News tipped us off to an area of lawyering we forgot to check in on: law school clinics.