Urban Hayride

More on the 'burbs

I have written an awful lot on rising energy prices lately, so here is some more. 

Paul Krugman's take on rising energy prices and its effect on suburban lifestyles (by way of Richard Florida):
   

    "And in the face of rising oil prices, which have left many Americans stranded in suburbia — utterly              dependent on their cars, yet having a hard time affording gas — it’s starting to look as if Berlin had     the     better idea.

   

    Changing the geography of American metropolitan areas will be hard. For one thing, houses last a lot         longer than cars ... Infrastructure is another problem. Public transit, in particular, faces a    
    chicken-and-egg problem: it’s hard to justify transit systems unless there’s sufficient population
    density, yet it’s hard to persuade people to live in denser neighborhoods unless they come with the    
    advantage of transit access"

Florida argues that it is not rising gasoline prices that are driving people to city's core and more dense, pedestrian urban areas, but simply efficiency. 

    "But it's not fuel costs that are driving this, it's the time and networking costs.  Who's moving back to US     super-star cities? Not the middle classes, rather it's the relatively affluent, who are choosing to trade-off        space for time".

A couple of months ago, I tried to demonstrate this by riding my bike about a mile and 1/2 while some friends of mine drove.  While the car left about 10 minutes before I, I had time to make a sandwich, eat and watch the news for those ten minutes.  I still managed to get to the event before the carload.  I don't intend for this to be an elitist, "I'm smarter than you" comment, but it clearly illustrates (very simply) Florida's point.

The Benefit of a College Degree

What is the return on investment of attending college? 

I was fishing around on the NPR website and ran across an interview with Marty Nemko.  Dr. Nemko recently posted an Op/Ed piece regarding the benefits of a college degree:

Today, amazingly, a majority of the students whom colleges admit are grossly underprepared. Only 23 percent of the 1.3 million high-school graduates of 2007 who took the ACT examination were ready for college-level work in the core subjects of English, math, reading, and science.

Perhaps more surprising, even those high-school students who are fully qualified to attend college are increasingly unlikely to derive enough benefit to justify the often six-figure cost and four to six years (or more) it takes to graduate. Research suggests that more than 40 percent of freshmen at four-year institutions do not graduate in six years. Colleges trumpet the statistic that, over their lifetimes, college graduates earn more than nongraduates, but that's terribly misleading. You could lock the collegebound in a closet for four years, and they'd still go on to earn more than the pool of non-collegebound — they're brighter, more motivated, and have better family connections.

After listening to the entire interview and then reading Nemko's article, I suddenly had a very depressing feeling wash over me.  I am a graduate student, taking on more debt and opportunity cost with each day that passes.  Dr. Nemko almost ruined my day. 

If you attend college simply to get a job and believe that you would never survive without having a degree, or if you still believe that, you are wrong.  Nemko hits the nail on the head when he states that we may be producing too many college graduates that are not prepared to take on a job with any more responsibility than they were before they left home. Actually, not going to college would have spared those people from the quarter-life crisis that they are about to experience as they are now stuck in a job they can't stand.

Now, once I took this all in, the depression started to subside and my mind was clear again.  Nemko is right to say that not everyone should be convinced to go to college.  However,  it almost seems as if he is suggesting that seeking a college degree and a white collar job is equivalent to chasing a dream to become a rock star.  I would argue that is not the case at all; any thoughts?

I have a lot more to say on this topic, but I want to go ahead and get this posted.  I'll return to the issue soon.

 

Who Makes Those Bike Racks?

Finals along with a string of graduations has replaced my blogging over the last couple of weeks.  For that I apologize.  There have been dozens of topics that I've wanted to discuss and have failed to do so.  The book of Post Its on my night stand is full. 

Since my last entry, Goldman Sachs analyst Andrew Murti predicted that the price of oil will spike to $150 or $200 before the end of 2009.  Murti has predicted an oil spike once before - he is the same analyst that predicted oil would rise above $100.  The latter prediction was made in 2005.  Turns out Murti wasn't quite as crazy as some people had originally thought...  It is much harder now to doubt Murti's current forecast.

"The possibility of US$150 to US$200 per barrel seems increasingly likely over the next six to 24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty,"

So, are people beginning to drive less now that gasoline prices average over $3.50/gallon?  According to multiple sources, they are.  Today RTD ran a story regarding ridership at GRTC - it's up.

I do not refute the notion that GRTC has major problems, because it does.  Before I began writing this entry I tried to plan how I can take the bus to work this summer.  It's not looking good.  It seems easy enough for a bus to simply shoot down Cary Street 20 blocks from the edge of Oregon Hill to the business district... I guess it's not.

However, the argument against GRTC and other public transportation that so many people make, usually involving the use of "their" tax dollars, is ridiculous.

Everyone needs to stop whining about taxpayers subsidizing GRTC! Do you not understand that the massive road system in which you all drive on is also a major government expenditure? Many pedestrians and those dependent on public transportation who never drive a mile on the interstate system "subsidize" it through their tax dollars.

So, being the student of finance that I am, what investments can be played off of this trend toward alternative transportation?  Maybe find out who produces bike racks.  I have a feeling it will soon be quite trendy to place a rack in front of every building in town...   

UPDATE: I am catching up on my reading and I noticed a recent entry by John Sarvay on the topic of oil prices.