Few would call me crazy for suggesting that the airline industry is in a state of utter chaos right now. I'm not sure how many are considering, however, what that means for transporting ourselves in the future. With crude oil at $130, a lot of analysts see bankruptcy for the legacy air carriers as early as Q1 2009. If Goldman Sachs is right and oil breaches $150 and goes to $200, it is extremely difficult to imagine how the industry could survive at all. Given those numbers, where will Americans be traveling 5 years from now? James Howard Kunstler answers that question in today's Washington Post:

Fixing the U.S. passenger railroad system is probably the one project we could undertake right away that would have the greatest impact on the country's oil consumption. The fact that we're not talking about it -- especially in the presidential campaign -- shows how confused we are. The airline industry is disintegrating under the enormous pressure of fuel costs. Airlines cannot fire any more employees and have already offloaded their pension obligations and outsourced their repairs. At least five small airlines have filed for bankruptcy protection in the past two months. If we don't get the passenger trains running again, Americans will be going nowhere five years from now.

Whether it be inner-city rapid transit systems or cross-country commuter rail, now is the time to invest in these projects. Some say that the United States is too big geographically, not dense enough population-wise and not cultural similar to places like Japan and the European Union, where high speed commuter rail is wildly successful; but Americans are innovative people - surely we can figure out some way to make it work. If we sit on our hands praying for the survival of the airlines, it might just be too little to late to invest in rail if things don't work out...

Edit: Reuters ran an article today (June 11) asking why the federal government keeps bailing out airlines while the Bush administration threatens to veto Amtrak funding and effectively thwart any potential growth for the railroad. Amtrak now has historically record ridership, which is up 12.3% year over year.

Life in 2030

A trend seems to have emerged over the past few weeks on my blog, but with oil crossing well into $130 per barrel territory, topics like car culture, urban development, public transportation, and gasoline taxes have become quite mainstream. I have had lengthy discussions with a lot of people on all of these topics over the past several months, and this post is my attempt to organize my thoughts and present my positions.

Is the “American Dream” Dead?

American culture is wildly different from most of the developed world. We embraced cheap energy and built a suburban utopia on it. The “American dream” became one in which a family could live peacefully, 10 or more miles away from their jobs; they could drive big heavy vehicles to take themselves to work, school, the mall or the supermarket; they could live in huge homes that required huge amounts of heat in the winter and electricity for central air in the summer; they could have big yards with green grass and lawn mowers criss-crossing once a week. As Paul Krugman recently noted in his New York Times column, this “American dream” may no longer be achievable for many.

Don’t get me wrong, many Americans are optimistic that this lifestyle is sustainable. Until recently, I honestly believed technology would be the answer: if we could build cars that ran more efficiently and without fossil fuels, and if we could develop renewable energy that could power and heat our suburban homes, we could continue living the lives we have become accustomed. I checked out books from the public library on topics ranging from biodiesel to wind turbines to green investments; I took two college courses on topics dealing specifically with energy economics and hydrogen fuel cell development. Ultimately, I was disappointed with what I learned.

The Answer Is Not Replacing Cars with Different Cars

I recently had a discussion with a friend who was passionately excited about the Honda FCX – a hydrogen fuel cell powered vehicle being developed for distribution in the United States. I understand why some get excited about a concept like the FCX: a car which is powered by hydrogen, one of the most abundant and renewable elements in nature, which is completely clean and releases no polluting exhaust. Best of all, it is not a pipe dream – the technology exists and works. Honda has launched what seems to be a relatively aggressive advertising campaign, this is one of a few commercials I have seen:

I like what fuel cells have to offer and I think we have a lot of exciting energy technology that do some very interesting things; nevertheless, I study economics, not science, and these breakthroughs mean very little to me if their cost doesn’t make sense. When I look at the Honda FCX, I see something with a lot of potential, but I also see some very difficult challenges that I’m not sure can be overcome:

Cost – the lease for the Honda FCX is $600, which is considerably higher than the lease for a basic Honda Civic or any other class of sedan. Gripe all you like about the cost of gasoline, but the cost of hydrogen for these fuel-cell powered vehicles is even more expensive. On the best apples to apples basis, hydrogen fuel runs at about $8 per kilo (a kilo of hydrogen contains about an equal amount of energy as a gallon of gasoline). Even with the current gasoline prices, that is still a 100% premium. With the cost of both the car and the fuel where it is right now, only dreamers are going to be cruising around in these things; there seems to be little hope that it could go truly mainstream anytime soon.

Hydrogen – proponents (and marketers) cite the abundance of hydrogen in the environment as a major benefit. Water, or H2O, is one of many places hydrogen can be found. I’m no chemist, but I do know the basics of the science. Hydrogen and oxygen are strongly bonded in water, and in order to separate the two elements through the process of electrolysis, you need (you guessed it) energy. Right now the cheapest energy is derived from sources like coal and natural gas, certainly not the bastions of “clean energy” that hydrogen proponents cheerlead for. In the true “hydrogen economy” the fuel would be created through electrolysis, which would be powered by solar panels and wind turbines, this reality is many years in the future.

Infrastructure – even if all the other challenges are met, hydrogen still faces a major infrastructure problem – mainly, that one doesn’t exist. Building the infrastructure will be extremely difficult going forward because of the typical chicken and egg problem: people won’t embrace this technology until infrastructure exists, and infrastructure won’t exist unless the technology is embraced. Government could subsidize the infrastructure, but again, it would be pointless until the price is right; there is a better place for government to spend its money.

Think Outside the Box

The reality is that it energy is getting increasingly expensive but the cars we drive have changed very little. Where there has been a noticeable change in trends over the past few years is in urban redevelopment; and this is true in many different cities across the country. I honestly believe that the reason is because urban redevelopment isn’t a solution that we need to wait for (like car technology), redeveloping our cities in an option that is available here and now. There has also been a noticeable trend in public transportation utilization (more so in places with strong existing infrastructure, but more on this in a moment). Ultimately, I believe the answer is twofold:

Urban redevelopment coupled with public transportation infrastructure development.

The Role of Government

When it comes to urban development, local governments need to step up to the plate. Some of the most successful development projects in the past decade have involved the creation of mixed-use development, in which people live, work, shop, and eat, all in the same neighborhood. Rather than a big shopping mall in one part of town, an office park in another, and condos in a third, connected by roads and cars, the goal should be to combine them into one neighborhood. Local governments need to consider re-zoning their cities for these projects and convincing companies like Forest City Enterprises and Nationwide Realty that these projects are profitable, sustainable and welcomed.

With public transportation, the situation is slightly more complicated. Unlike urban development, which will take place primarily in the private sector, localized public transportation should always be left to the government. Building new public transportation infrastructure has very high up-front costs and has been a major argument of opponents in years past. In Washington, DC, for example, the Dulles Corridor project is slated to cost $2 billion for the first half of the project and in Dallas, Texas, the new DARTrail line has a price tag of $2 billion.

The truth is that most local governments simply don’t have that kind of cash for these projects and the federal government must step up with support. The price may be expensive, but NOW is the time to build this infrastructure. Every year that ticks by as politicians fight over who will fund these projects and whether they will be utilized, the more expensive the projects become. Building rapid transit infrastructure in America’s 25 biggest cities will cost significantly less now than it will in 10, 20 or 30 years, and the value created over the same period of time is enormous. Public transportation infrastructure can be linked to urban mixed-use development and will feed the cycle that brings people from the suburbs back to cities. Consider a rapid transit system with 20 stations built into redeveloped mixed-use neighborhoods and the potential begins to look exciting.

Life in 2030

There is no doubt that my proposals will radically change the way we will – but that is not a bad thing. A lot of people in the United States fear “living like Europeans” or giving up luxuries like the vehicles, and big yards, but I think the fears are overblown. When people imagine a future where they don’t have a car, they imagine being stuck in their oversized home, 2 miles from the supermarket and 5 miles from the mall, because that life is all they know. In mixed use urban developments, everything is right in front of you, and visiting other mixed-use developments would be easy thanks to improved public transportation infrastructure. The concept may seems scary to some, but there are plenty of Americans already living in these types of neighborhoods, and they’re not doing too bad at all.

Car Culture

I spotted this sign while walking down the street in Dallas today; I think it says something interesting about Texas (and American) culture.

The irony is that Texas is a state where owning unnecessarily large and fuel-inefficient vehicles is something to be proud of. Yet as fuel becomes more expensive (and Texas still has some of the least expensive retail gasoline in the developed world) we do not want to pay for it. At first we complained about how unfair high prices are, then politicians pitched gimmicks that do not work (as I’ve blogged about), but now we are coming to the realization that fuel is something we have to pay a premium for if we want it. Thus Subaru dealerships in Dallas seem to be resorting to an interesing strategy of pitching “good gas mileage SUVs”. Of course, anyone with half a brain knows that SUVs do not get good mileage (compared to smaller and less expensive sedans), but the idea of being able to drive a big SUV and not having to buy fuel as often might be appealing to a lot of Texans, and is a pretty strong indication of how powerful the “car culture” is, at least in Texas, but certainly elsewhere across the country as well.
As I was cruising around Dallas tonight I saw a guy at a Shell station in one of the wealthier parts of town updating its big sign to reflect the price of regular unleaded: $3.99. Not surprisingly, I found many of my friends joining the classic “boycott Exxon on May 26th!” group on Facebook. I’ve blogged about this topic before and don’t need to beat a dead horse: the boycott Exxon and gasoline strike gimmicks fail. They didn’t work last year or the year before and they won’t work this year. For more on this question, see my blog from last spring.

I realize though, I’ve spent too much time blasting the people who come up with these schemes, and after all, they are admirable individuals – they just need some help understanding what will and what will not solve the gasoline problem. So here is a scheme that we can all get on board with (pun intended), I called it: National Swarm the Subway Day.

An excellent way to reduce the demand for products like gasoline is to simply quit driving. Unfortunately, for many who have built their lives around the suburban lifestyle, this is a difficult option. A major problem in this country is that too many cities have sub-par public transportation systems. On the one hand, it is very difficult for local officials to justify spending millions to expand and upgrade these systems when so few people use what already exists. On the other hand, if you ask people why they do not use public transportation, many will answer that the service doesn’t go where they need to go and that it is too infrequent to be useful (nobody wants to stand at a bus stop for a half hour in the blazing summer heat waiting for a bus while their ice cream melts in the bag).

So on May 27th, the morning after Memorial Day, everyone will take some form of non-car transportation to work. We will cram onto busses, we will flood the streets with bicycles, and we will gridlock entire metro stations. The situation will be so bizarre and such a mess than local and national media will have a golden story on their hands. Local leaders will be forced to notice that we actually want expansive public transportation options, and if they are available that we will use them. There are only a handful of public transportation systems in the United States that can be considered fully useful for everyday living – but their existence proves that we can develop alternatives so that entire cities can be livable without needed cars.

The fact that the world’s smartest economists are constantly calling for higher taxes on gasoline should speak volumes – but for whatever reason it doesn’t. There are alternatives that work; rapid transit is one of the most useful ways of getting around - the challenge is justifying the investment. National Swarm the Subway Day should be a good start.