Suburban Shrinkage

Vera Prescott: I hate all these trees. They soak up all the oxygen.
Brantley Foster: No, actually trees produce oxygen.
Vera Prescott: Who are you? Mr Wizard?
--The Secret of My Success

There is perhaps no greater factor that contributed to urban sprawl than cheap energy. Cheap gas made it feasible for folks to live way out in the stix and to commute 50 miles or more round trip to work. Moreover, low cost heating and cooling energy helped to facilitate the building of suburban McMansions.

My sense is that higher cost energy going forward will reverse the sprawl and drive social movement towards centralized, more efficient living. People will move back toward urban centers to reduce the cost of movement. Demand for smaller homes will rise.

Such a movement will be bearish for remote real estate and for SUV sized vehicles. It should be bullish for urban real estate and vehicles that facilitate local travel.

Social trends tend to overshoot. The last few decades have seen tremendous build out away from cities. More expensive energy may drive a secular trend in the other direction.

position in energy