Why a Long Driving Commute Still Doesn’t Make Sense

Do lower gasoline prices mean you should buy a house farther out in the suburbs and commute a long distance to work? This is a suggestion that some analysts have made, but there are several reasons why it may be a bad idea.

First there is the mismatch in timing. A house is meant to stand for 75 years at least. Gasoline prices may change by 10 percent from one week to the next. When purchasing a house, you have to consider the cost of transportation between the house and all the other places you will go over the life of the house. It makes no sense to look at the price of gasoline for just this week or this year. When you look at the transportation costs associated with a house, you have to guess what the costs will be for as far into the future as you dare to imagine.

Home buyers might assume they can sell the house and buy another one if gasoline prices go up again and their plans change. This is true in a sense, but the selling price of a remote house will decline accordingly when fuel prices increase, so that the price you sell the house for may be less than you still owe on the mortgage. By the same logic, it can take years to sell a house in an area that has lost its luster. Historically, this is part of the reason why there were so many banks that failed around the outside edges of metropolitan areas around 2009. High gasoline prices between 2005 and 2008 left an overhang of abandoned houses and failed shopping centers, and the banks were left owning many of these buildings with no one to sell them to. It was a disaster for dozens of banks, but for homeowners moving out of these areas, it meant losing all the money they had put in over years of housing payments and having to start over. Who would go into a situation like that on purpose?

The other obvious problem with setting yourself up for a long driving commute is the lifestyle it leads to. The commute itself takes time and may be a source of daily stress. Studies show that workers with long driving commutes sleep fewer hours on weeknights (because they get up before 6 a.m.) and as a result are more prone to the diseases of inflammation, such as diabetes and cancer. In lifestyle terms, it makes little sense to buy an impressive house that you barely see because you are home and awake for only two or three hours every evening. A suburban house might benefit other family members, but family relationships are strained by the wage earner’s absence.

Long commutes make more sense for those who already have a place to live and are scanning a difficult job market for the best jobs they can find to dig out of their respective financial holes. Working at a job that is almost an hour away by car is typically better than not working at all. However, for those who have a stable job and can choose where to live, it doesn’t make sense to look for the most remote place they think they can afford. Fortunately, there hasn’t been a big rush of people moving to the outer suburbs in these last 13 months of reduced gasoline prices, and I don’t expect it will become a major trend in the months that remain before gasoline prices go up again.

Tesla Motors Sells 10,000

Tesla Motors defied the skeptics again with its first 10,000-car quarter, and at the rate it is going, it is only about a year away from being a major player in cars. Tesla has a lot going for it as it tries to double its volume again, and I’m not talking about abstractions such as confidence or momentum. It has designs that won’t need more than incremental adjustments. It has enormous manufacturing capacity, at least in terms of factory floor space and assembly robots. Skeptics point to the competition that will come along in electric cars as soon as Tesla demonstrates success on a large scale, but Tesla has a ten-year head start and a better engineering process than you can find in Detroit. It will take years for other manufacturers just getting started with electric cars to achieve the same degree of refinement.

In Indiana, an Insurrection Defeated

It didn’t take long for Indiana to patch up its right-to-bigotry law, and my guess is that this correction will ultimately stand. The interesting thing is that Indiana’s lawmakers did not make any pretense of repealing the “right to bigotry” itself. That part of the law still stands. The only purpose of the amendment was to separate the “right to bigotry” from the conduct of business, so that anyone doing business with the public can no longer use the law as a license to discriminate, and the culture-war faction can no longer openly use businesses as battlefields against their perceived enemies in American culture.

This is a big deal in a state where businesses were already starting to advertise their enemies lists — and no surprise, it was “non-Christians” who were set to suffer the most at the hands of Indiana businesses. The unfairness of this startled people, but it was the way this seemed to undermine the social contract that was most worrisome. Part of the social contract, in the United States and in most of the civilized world, is that if you conduct yourself more or less peacefully, you are free to participate in the commercial life of the community. You can, for example, go into a store and buy food. The Indiana law seemed to take that away. Could you buy pizza in Indiana if you were gay, or Muslim, or foreign? Suddenly, no one was sure. The new amendment reassures everyone that the state of Indiana is not trying to repeal the social contract, at least not openly and directly. The “right to bigotry” remains on the books in spite of the latest change, and with that, people are viewing the state government and politicians of Indiana as somewhat un-American, and rightly so. However, with the social contract reaffirmed, the crisis in Indiana is over, and now we will see a more familiar protest based on the ideals of fairness and civil rights. The protest is far from over, but it will be a little quieter than the national battle we saw last week. That was the fury of a country scorned and having to stand up to quell an insurrection.

This Week in Bank Failures

China has decided to postpone deadlines for new bank technology rules intended to protect banks from Internet spying. Even with the delay, the new rules will represent a difficult adjustment for banks in China. In the long run banks will benefit from the changes, which will reduce operating costs by reducing both the complexity of banking technology and the frequency of security incidents.

Royal Bank of Canada is selling RBC Suriname to Trinidad & Tobago-based Republic Bank. Reportedly the selling price is near the book value of the subsidiary. RBC has been slowly pulling back from its presence in the Caribbean.

The ECB quietly expanded its credit limit for banks in Greece by €1 billion, while warning the largest banks there against any increase in their domestic credit exposure.

Waiting for Lawn Mowers

The mowing season traditionally gets started with the first weekend in April where I live, with spring weather creating the first burst of grass growth. Cooler weather may delay that by a week this year, and that’s a lucky thing, with retailers having hardly anything to sell. I looked for a new lawn mower at the web sites of home improvement stores like Home Depot and Lowes and department stores like Kmart. The online catalogs boasted dozens of models, but none that I looked at were actually available for purchase. The retailers had virtually nothing in the stores, their sites said, and even less for sale online. Warehouses nationally were depleted of most models. There was no estimate of a new supply coming in. I eventually found a unit available for sale at Walmart with a wait of one week, though there too other models were out of stock and not immediately available for order. If all goes well, I will have my new lawn mower next week. Walmart is not one of my go-to sources for anything, and it was my first purchase there since their exclusive arrangement on music CDs by Journey and Foreigner a few years ago.

It seems likely enough that lawn mowers are delayed in part by the high-profile problems at West Coast ports. I wonder too if there are problems resulting from retailers erroneously classifying lawn care as a summer activity. Lawns might be more visible in summer, but grass grows twice as fast in spring, so that half of the year’s lawn growth may occur in April and May. Whatever the reason, retailers are caught short with the season getting started. A delay of a few weeks in getting a lawn mower is no more than an inconvenience, but the fact that the supply chain hasn’t been able to keep up is a sign of how close to breaking large parts of the economy are even when things look like they’re going smoothly.