The Daily Score blog - Sightline Daily

Cap and Trade: Grandfathering Still Sucks

Clark Williams-Derry — Tue, 13 May 2008 14:46:17

Kevin Drum takes a crack at explaining the woes of "grandfathering", and nails it:

If you give away permits [under a cap and trade system], common sense suggests that since there are no additional costs to emitters, they won't raise their prices. But it turns out this isn't true. Thanks to the opportunity cost of the permits, they'll raise their prices just as much as if they'd bought the permit in an auction. (This isn't just a theory, either. That's how the European cap-and-trade system worked initially, and prices really did go up. If you want the gritty detail on why it works this way, read this paper.) So: power plants end up raising their prices, but since the emission permits are free their costs don't change. Result: a huge windfall profit for GHG emitters. Some get more and some get less, but the overall net result is lots of extra profit, with the biggest polluters getting the biggest profit.

Soon enough, if everyone who understands this point keeps repeating it, it'll sink in. And then--hopefully--the press will stop looking at us cockeyed when we explain that giving permits away for free WON'T help consumers.

But let's hope it sinks in before Congress, or individual states and provinces, pass some misguided cap-and-trade legislation that gives away lots of permits for free.

Truckers Hit the Brakes

Eric de Place — Tue, 13 May 2008 11:16:50

No kidding, the American Trucking Association wants trucks to go slower:

The plan calls for governors on new trucks to limit speeds to no more than 68 mph, a call to reduce the national speed limit to 65 mph for all vehicles...

The proposal isn't just altruism. It's another instance in which self-interest and the public interest are aligned. Soaring diesel prices make it economical to reduce speed, thereby saving fuel and carbon emissions.

We've heard anecdotes about this, and we even seen some empirical research. Now we're seeing intentional policy. There's other good stuff in the plan too:

Also on the list is reducing engine idling, improving highways, using more productive truck combinations, and setting fuel economy standards for trucks.

Apparently, a number of trucking companies are already taking the initiative to get creative about reducing fuel use. They're crunching the numbers to find savings -- and then they're reducing load weights, switching to effiicient tires, upgrading lubricants, and installing aerodynamic panels.

Chalk this up as more evidence that the transportation sector really does respond to price signals. Just as in other energy sectors, smart policies can wring all kinds of efficiencies out of the transportation system.

[Hat tip to Ross McFarlane; photo by Geognerd, distributed under a Creative Commons license.]

McCain's Climate Plan: Not Awful

Eric de Place — Mon, 12 May 2008 18:10:42

Today, John McCain traveled to Portland, Oregon and speechified on his new climate policy. His plan is far from perfect -- more on that later -- but it's a remarkable departure from a certain president who shall remain nameless:

Instead of idly debating the precise extent of global warming, or the precise timeline of global warming, we need to deal with the central facts of rising temperatures, rising waters, and all the endless troubles that global warming will bring. We stand warned by serious and credible scientists across the world that time is short and the dangers are great. The most relevant question now is whether our own government is equal to the challenge.

That's a darn good question to be asking! And to the extent that McCain's new proposal, flawed as it is, constitutes the lower bound of new national climate policy, we've just made a gigantic step forward.

So what's wrong with McCain's plan?

1. The targets are too modest. It calls for 60 percent reductions (below 1990 levels) by 2050, rather than the more aggressive 80 percent targets favored by the democratic candidates. Eighty percent is now something of a consensus position for public interest groups, and the minimum reduction recommended by James Hansen and other leading climate scientists.

2. It allows for unlimited "offsets" from both foreign and domestic sources. There are two big problems with the anything-goes approach to offsets. For one thing, there's simply no guarantee that the offsets are real (and our experience to date suggests that they're often chimeras). And two, a huge offset program drastically reduces the incentive for businesses to innovate and adapt. Why invest in efficiency measures when you can just keep polluting and pay for a phantom tree-planting project in Indonesia?

3. It gives away carbon permits for free at the outset of the program, moving toward auctioning only later. That's a big problem -- and something we can learn from our carbon-trading friends in Europe -- because giving away permits has the effect of bestowing windfall profits on private corporations. Consumers, of course, pick up the tab. A better approach is auctioning the permits and then using the revenue for the public benefit, perhaps simply rebating the funds on a per capita basis.

Speaking of those Europeans, it's a discouraging legacy of American sloth on climate policy -- and no small irony -- that McCain's presidential climate plan was delivered at a Vestas plant. Vestas, by the way, is Danish company that now dominates the global wind turbine market.

It used to be that American companies had a big stake in alternative energy. But US investments in alternative energy stagnated for many years and our position eroded. So now, as our national policy finally startst to get serious about climate change, it looks like we'll be be buying our efficient technologies from the Europeans.

It doesn't have to stay that way, of course. With smart policy -- maybe juiced by some carbon auctioning revenue -- there's plenty we can do to foster homegrown solutions.

Puget Sound's Lesson For Oregon

Eric de Place — Mon, 12 May 2008 10:35:21

Oregon policymakers are now developing a very large transportation package that may go before voters this fall. As they design the package, officials should heed a recent cautionary tale: Puget Sound's big roads-and-transit ballot measure that was defeated in 2007. As far as we know, it was the first time in US history that concerns about climate change played a pivotal role in a public vote on transportation development.

There's every reason to believe that there is a growing segment of Pacific Northwest voters that is aware of the connection between climate and transportation. And Northwest voters are willing to vote against transportation investments that could increase climate-warming emissions. In fact, independent polls suggest that this voting dynamic contributed to the defeat of Proposition 1.

There is a straightforward solution, however. Including highway transportation fuels in a comprehensive cap and trade program could largely inoculate transportation packages from this voting dynamic. If cap-and-trade policies effectively guarantee reductions in climate-warming emissions, then proponents of transportation measures can convincingly argue that new transportation projects won’t, in fact, lead to higher global-warming emissions. But leaving transportation fuels out of a cap could subject future transportation mega-packages to the same political dynamic that sank Puget Sound’s transportation measure.

Details are below the jump.

** In November 2007 Puget Sound’s Proposition 1, a $17 billion dollar roads and transit package, was defeated by a margin of 55 to 45.

** Although the package included major transit investments and garnered some environmental support, the Cascade chapter of the Sierra Club and several other environmental advocates opposed the package on climate grounds. King County Executive Ron Sims, a leading pro-transit politician, also opposed the package, in large part because of potential climate impacts.

** Some transit advocates argued that the roads-and-transit package could have significant climate benefits. But the lack of firm guarantees or careful analysis undermined this argument, particularly given the substantial concerns raised by environmental advocates about the roads projects.

** After the vote, public opinion firm RT Strategies found that a key group of “Pro-Transit Defectors” – comprising about 6 percent of voters – would have voted yes on the Transit-only elements of the package, but voted no based on their concerns over the environment and global warming. If these “Pro-Transit Defectors” had voted for the package, it would have narrowly passed.

** Two public opinion polls (see Figure 1 of this analysis by Moore Information/EMC Research and Question 3 of this RT Strategies exit poll) independently found that roughly 1 in 5 “no” voters cited environment/climate as a top concern in voting against the package.

** A comprehensive cap on climate-warming emissions—a cap that included highway fuels—could have nullified climate arguments against the package. A firm and effective cap would guarantee emissions reductions, regardless of what kind of transportation infrastructure investments are made.

Sprawl Killing Puget Sound

Alan Durning — Sun, 11 May 2008 19:03:56

Big three-day series in the Seattle Times on Puget Sound launches today. Day one is great.

If you're time-pressed, here it is, shorter: Sprawl is the real killer of the sound. Cities--complete, compact communities--are the solution.

Fortuitously, that's exactly what Cascadia needs for jobs, health, energy independence, and climate security too.

High Gas Prices, Healthy New Habits

Anna Fahey (and Clark Williams-Derry) — Fri, 09 May 2008 18:55:19

Teaching old dogs new tricks? It took soaring fuel prices for old habits to shift. But they're shifting alright. Just take a look at these poll results - Gallup finds that big numbers of Americans are making changes in their daily lives to deal with higher gas prices. Here's a snapshot:

Most telling, perhaps, is that 7 out of 10 poll respondents are considering a more fuel-efficient car. That's a change that'll help control energy costs for years to come, no matter what happens to the price of gasoline. (And given recent history, hoping for a return to cheap oil is a risk that fewer and fewer families are willing to take.)

Even though we can't control the price of gas, we can control our consumption - we can drive less, take transit, consolidate trips, drive slower, put air in the tires, carpool, walk...choices that are good for our pocketbooks, the climate, and our health. So, it's no surprise that Americans are already choosing smarter travel habits. Over the long haul, it's just common sense.

Rising energy costs--and our demonstrated ability to adjust our consumption in response--gives us all the more reason to support a cap on climate-warming pollution. A cap will allow us to take charge of our energy future, invest in alternatives that are more stable, and keep more of the money going to foreign oil in our local economies - with the added bonus of taking action to turn around our impacts on the climate.

SUV Rollover

Clark Williams-Derry — Fri, 09 May 2008 13:12:44

Via Calculated Risk, USAToday is reporting that SUV resale value is plummeting.

[W]holesale prices on big SUVs such as Chevrolet Tahoes, Ford Expeditions and Toyota Sequoias are down 17% from a year ago. Full-size pickups have fallen as much as 15%...

The reason, obviously, is that soaring gas prices are souring car buyers on the big guzzlers. When a gallon of gas was cheaper than a cuppa joe, size and power seemed like nifty luxuries. But with gas nudging $4, the luxuries have become albatrosses.

There's absolutely no reason for "I-told-you-so's" here. Cars are the second largest purchase most people ever make, next to their homes, so rapid depreciation will be a serious hit to a lot of families. Still, there's not all that much to be done: SUV owners, whether they knew it or not, were making a bet that oil would stay cheap for a good, long while. It didn't, and they're paying the price for a bet gone bad.

The only thing that we can do, collectively, is to stop assuming that oil will be cheaper in the future than it is today. Maybe it will be; but the experience of the last 8 years suggests otherwise. Still, despite price hikes that outstripped most predictions, there are all sorts of decisions -- from what kind of cars to buy, to what kinds of neighborhoods to build, to what kind of transportation investments we should pay for -- that are being made under the tacit assumption that gas prices will come back to earth.

That's a risky bet. Just ask someone who's trying to trade in a Toyota Sequoia.

[Picture courtesy of Flickr user joguldi, distributed under a Creative Commons license.]

Utilities and Auctions: There Is No Free Power Lunch

Clark Williams-Derry and Alan Durning — Thu, 08 May 2008 13:03:54

An economy-wide cap on climate warming emissions – our preferred climate policy – has one enormous sticking point: once the cap is in place, who gets the right to pollute?

That’s the core of the debate over the “allocation” of emissions permits. Literally billions of dollars are at stake. And not too surprisingly, just about every industry you can think of believes that, once strict emissions limits are imposed, they should get a generous slice of permits for free.

Much of this is just money-grubbing, plain and simple. Permits will have a market value, so giving away permits is a lot like giving away free money. Free permits will mean big windfall profits to large emitters – an idea that shareholders and execs LOVE, but consumers and taxpayers should hate.

But in some cases, the arguments against free emissions permits aren’t so clear-cut. In much of the US West, for example, investor-owned electric utilities can't set their own prices; instead, their rates are set by public utility commissions. And if those commissions are attentive and careful, the investor-owned utilities have a pretty hard time raising prices to capture “windfall” profits. Moreover, some utilities are actually owned by the public, or by the customers they serve – which makes the whole “windfall” issue moot.

Many utilities are arguing – in good faith, we think – that it would be better to simply give utilities permits, so that customers don’t have to pay for the cost of buying permits at an auction. Free permits will benefit consumers, their argument goes, by limiting electricity rate increases.

Are the utilities right about this? Could free allocation to utilities be a real boon to consumers?

We don’t think so. In fact, handing out permits to utilities for free has the potential to backfire, raising the overall cost of emissions reductions -- thereby increasing the cost that consumers pay for all of their other energy needs.

There are four reasons that “protecting” electricity consumers from rate increases would likely backfire, raising costs for everyone in an economy-wide cap. Three reasons are economic, one is political. Taking each in turn...

1. Lower power prices discourage efficiency.

If electricity stays cheap -- and, in particular, if electricity prices don’t reflect the true cost of emissions -- fewer people will upgrade their old fridges, unplug the extra freezers in the garage, or install super-efficient ground-source heat pumps. (If power’s cheap, why not just stick with the old fridge?)

More generally, cheap electricity means that it takes longer for any efficiency upgrade to pay for itself – which undermines the incentive for paying for the upgrade in the first place. As a result, keeping electricity prices low could undermine incentives for households and businesses to trim their consumption – which is often among the cheapest ways to reduce emissions.

2. Inconsistent prices encourage climate-disrupting fuel choices.

If electricity rates remain low, but natural gas and fuel oil prices have a “carbon price” attached to them -- as they will under a comprehensive cap-and-trade system -- then electric power prices will look awfully enticing. Some folks will likely switch from, say, gas heat to electric heat. And others will choose to stick with their electric heat rather than switch to gas.

From the consumer’s perspective, this makes sense: they’re choosing a cheaper fuel option. But from the climate’s perspective, electric resistance heat is a bad deal. As long as the western power grid gets its marginal electric power from natural gas and coal, switching to electric resistance heat is a far worse choice for the climate than heating directly with natural gas.

In the same way, if gas prices rise but electricity stays cheap, we could see big boosts in electric cars or plug-in hybrids. If the electricity comes from renewable sources--great! But if it’s from coal-fired plants, it could be worse for the climate than plain-old gasoline.

So in general, until we squeeze most of the fossil power out of the electricity grid, switching away from direct fossil fuel use, and towards electricity, can increase climate-disrupting emissions.

3. Once a cap is in place, lower electricity prices might increase total household spending on energy.

This is counterintuitive, we know. But here’s why.

Electricity is a great place to find cheap emissions reductions. There are already low-carbon alternatives to coal-fired power -- especially new wind and solar -- and the Northwest Power and Conservation Council, among others, has already identified scores of low-cost ways to reduce end-use consumption.

However, if low power prices boost consumption (see points 1 and 2 above) then it gets harder to satisfy demand with efficiency and new renewables alone. A boost in power demand could give old, dirty coal-fired power plants a stay of execution -- with a much slower phase-out of coal from the West's generation mix.

If coal-fired power plants remain active for longer, the emissions cap will force steeper reductions in transportation and industrial emissions. Those kinds of reductions could easily cost more per ton than reductions in coal power -- and those higher costs will translate into higher market prices for carbon permits. Higher permit costs, in turn, will get passed through to households as higher prices for gas, diesel, heating oil, natural gas, manufactured products, food, you name it.

So in the end, free permits to electricity could mean that consumers face lower prices for electricity, but far higher costs for all other fossil energy. And on balance, since electricity represents a relatively small share of household emissions – particularly here in the hydro-rich Northwest -- the modest savings on power could be overwhelmed by higher permit costs in other sectors.

The whole point of a cap-and-trade system is to find the cheapest emissions reductions, wherever they may be. By diluting the price signal in electricity, we may wind up creating higher permit costs in other sectors – costs that, in the aggregate, loom larger in family budgets.

4. Granting free permits to one part of the energy industry—utilities—makes it far more likely that we’ll grant free permits to other parts as well.

This is a political argument rather than an economic one. If utilities get free allowances, other energy companies will insist on getting the same treatment. They’ll howl. They’ll rail. They’ll insinuate and lobby and grease palms. (They’ll do all these things anyway.)

So if the electric utilities carry the day, and successfully argue for free permits, it’ll be a lot harder to say “no” to the natural gas utilities, the propane distributors, the big industrial emitters, the pipeline companies, and ultimately even big oil -- the industries that really can extract windfall profits from their customers.

These are four reasons to think that handing out free permits to the utility sector is a mistake. Our impression, and it's only that, is that all too often, utility sector folks -- even the public-spirited ones -- tend to overemphasize electricity in their thinking. (Not surprising.) Electricity is a small part of the carbon game in the Northwest.

But we're convinced that arguing for free allowances for electric utilities is NOT standing up for utility customers. Utility customers don’t just buy electricity. They also drive, heat their homes, and pay for food and manufactured goods. The way to serve them is not to keep electricity prices low, it's to keep carbon prices low.

And that means utilites should buy their permits at auction, just like everyone else.

Climate Auctions: The Meme Spreads

Clark Williams-Derry — Thu, 08 May 2008 15:02:45

Seems like, every time I turn around, someone else has written about the virtues of auctioning carbon permits: not just auctioning some of them, but auctioning all of them. Kevin Drum of The Washington Monthly has the latest examples.

We Send Letters

Clark Williams-Derry — Tue, 06 May 2008 17:57:04

The Western Climate Initiative -- the multi-state, multi-province pact designing a cap-and-trade system for the Western U.S. and, now, large swaths of Canada as well -- has contracted out a bunch of economic modeling, in an attempt to get a handle on how various cap-and-trade policies might play out in the real world.

That's a good thing. Entering blindly into a cap and trade system would be dopey.

That said, your friendly neighborhood research nerds are a little worried about how the economic analysis is being done. It's not that we have specific complaints about the model itself. It's the opposite -- we can't possibly complain, because the company that the WCI chose to do the modeling won't tell anyone how their model works. It's a proprietary, closed system, you see, so there's absolutely no way to tell what inherent biases the model may have.

That's obviously a substantive problem: without a lot of eyes scrutinizing the model, flaws can go undetected. But -- far worse -- it's a perception problem. No matter how the model results turn out, people can point to the fact that the model is closed to challenge or outright reject its conclusions.

We even wrote a little letter to the WCI about these issues.

We've got some deeper and more general concerns about the economic modeling, too. In particular (Geek Alert!) the type of economic model that's being used here, called a "computable general equilibrium" model, or CGE model, has more than its share of problems and critics, both on mathematical and practical grounds. For example, there seems to be a surprising lack of research about whether CGE models have much predictive power at all: nobody seems to have compared the results of CGE modeling exercises done a decade ago, say, with the actual performance of the economy that the models were attempting to predict. Seems like the sort of thing one would want to know, if you're using a model to predict the future.

So for these reasons (among others) I think the WCI should treat modeling results simply as suggestive and potentially informative -- rather than as a rock-solid, perfectly reliable indicator of which policies are most worth pursuing.

Wild Sky Wins

Eric de Place — Thu, 08 May 2008 11:16:21

At long last, it's official: Washington gets a new wilderness area, the Wild Sky. It's 100,000 acres of streams, forests, lakes, and mountains on the west side of the Cascades.

Big congratulations are in order to the hundreds of people who worked to win this designation. The Wild Sky political process was an epic. First proposed in 2002, the nascent wilderness area was an exercise in tenacity. Last week, when the bill finally passed out of Congress, Seattle P-I columnist Joel Connelly had a nice article on the context and history. (Also good coverage last week from Seattle Times reporter Warren Cornwall, here.)

New wilderness designation in the Northwest has been tough to come by lately. But 2008 looks to be a promising year. As High Country News reports, the Wild Sky may be the first of several in the West: these include more than 500,000 acres in the Owyhee country of southwestern Idaho (the first wilderness in 30 years in that state); plus 264,000 acres in Utah (some of which is already in Zion National Park); and if we're lucky, a small but important new wilderness on the Oregon Coast that would protect nearly 14,000 acres in an area dubbed the Copper Salmon.

Businesses: Cap Transportation

Eric de Place — Tue, 06 May 2008 19:41:09

One of the biggest sticking points in the Western Climate Initiative (WCI) has been the question of "Scope" -- which emissions get included in the cap and trade program. Most public interest organizations argue for a broad cap that includes all the major sources of emissions that can be reliably measured and regulated. (Sightline's argued this here, here, here, and here.) And the biggest source of emssions, of course -- the biggest by far -- is transportation fuel.

Somewhat surprisingly, the debate about including petroleum is not a greens versus businesses standoff. In truth, most of the participating businesses and utilities are on the same page about Scope: they want it to be comprehensive. But this important agreement gets too often overlooked.

So, I'm setting the record straight here with a list of Western utilities and businesses already on record for a genuinely economy-wide cap (i.e. one that includes transportation fuels):

Alcoa, Boise Cascade, Chelan County Public Utility District, Clark Public Utilities, Florida Power & Light, Grant County Public Utility District, Independent Energy Producers Association, Industrial Customers of Northwest Utilities, Oregon Business Association , Oregon Forest Industries Council, Oregon Municipal Electric Utilities Association, Oregon’s Public Utility Commission, Pacific Gas and Electric Company, Pacific Northwest Generating Cooperative, Portland General Electric, Oregon's Public Power Council, Puget Sound Energy, Sempra Energy, Southern California Edison, Tucson Electric Power Company, Washington Public Utility Districts Association, WEST Associates Members (including Arizona Electric Power Cooperative, Arizona Public Service, Colorado Springs Utilities, Idaho Power Company, Basin Electric Power Coop, Los Angeles Department of Water and Power, Pacificorp, Platte River Power Authority, Xcel Energy/PSCo, Public Service Company of New Mexico, Salt River Project, Sierra Pacific Power, Southern California Edison, Tri-State Generation and Transmission, and Tucson Electric Power), and Weyerhaeuser. [You can find their written comments here, here, and here.]

Now, not all business support capping transportation fuels. Chevron, BP, Western States Petroleum, and a few allies oppose it, while other businesses have either not participated in the WCI process or have simply remained silent on the subject. But the support for a broad scope constitutes a pretty strong majority.

So what's going on? Why do the vast majority of utilities (and those who rely on utilities) support including transportation fuels? Simply put: it's in their self-interest.

Most of these utilities believe that including transportation fuels reduces the risk of price spikes for carbon permits. In low-hydro years -- when clean electricity gets scarce, and when utilities need dirtier power that requires carbon permits -- it will be an advantage to have permits available from sectors that are largely price-independent of electricity. These sectors inlude consumer natural gas and, most importantly, the transportation sector.

Plus, many of the utilities feel that there's just something unfair about including only a small share of the region's emissions under an enforceable cap, while allowing the much larger transportation sector to wriggle out. I can't say I blame them.

Absent the cap, WCI would likely try to address transportation sector emissions with "complementary policies," such as VMT strategies and vehicle efficiency programs. Many of these policies are fine ideas, but ultimately, a cap is a cheaper way to go. Because we can't predict the future, a truly economy-wide cap makes the most sense. It ensures that the cheapest and easiest reductions get made first, regardless of where opportunities arise.

A Thousand Little Pieces

Clark Williams-Derry — Tue, 06 May 2008 16:34:26

No point, just cool: The New York Times shows what Americans spend their money on -- and how fast prices are rising.

Check out gasoline: it's up 26 percent, year over year. But that's nothing compared to fuel oil: up almost 50 percent. Energy's up across the board, as are plane tickets, and plenty of food items. (What's up with eggs? Why are they going up twice as fast as other dairy products?)

Great graphic, fun tool, fascinating data -- but beware, if you don't have a lot of time to waste this afternoon, do not click.

Conventional Wisdom Watch, Gasoline Edition

Clark Williams-Derry — Fri, 02 May 2008 13:22:34

The nifty image to the right, taken from today's issue of The New York Times, says a lot: gas prices, coupled with recession jitters, have ushered in a sea change in the vehicle market. Fuel efficient cars are flying off the lot, while cars and trucks with big tanks are, well, tanking.

Hybrids aren't the only winner in this auto race. High-mileage compacts -- the Honda Fit, Toyota Yaris, and Ford Focus among them -- are experiencing a substantial sales boost too.

But to me, the most fascinating part of this article is this: recent trends have completely upended the "conventional wisdom" about how consumers respond to high gas prices.

You see, It used to be pretty common to read press stories that implied that drivers had no ability, or perhaps no willingness, to adjust their transportation habits in the face of higher prices. As gas prices rose, the stories went, consumers were doing almost nothing in response, other than tightening their belts in other areas.

In the Northwest at least, this has been false for a while. Gas consumption, measured per capita, has been going down for the better part of a decade. Still, the idea that gas prices were having no effect on driving seemed to be pretty much ubiquitous.

But now, look at what the Times says:

How the downsizing of America’s vehicle fleet will affect fuel consumption is still largely unknown. When gas prices rise, as they are now, many drivers simply drive less to save money. [Emphasis added.]

That's right -- the article takes the link between rising prices and driving for granted. They don't even bother to source it -- meaning that by the Times' standards, it's basically self-evident.

I think it's another sign that we've reached something of a tipping point: people are starting to understand that many families do, in fact, have some flexibility in how much they drive, and how much gas they use. And as gas prices near $4 per gallon, people are figuring out ways of cutting back.

Of course, "price elasticity " (as this effect is called) has been the conventional wisdom among economists since the days of Adam Smith. So it's nice to see the idea finally getting a little ink for a change.

Gas Prices Up, Sprawl Down

Alan Durning — Fri, 02 May 2008 13:33:38

Years ago, I heard from an economist friend about research showing that urban rents rose with oil prices in the 1970s, while suburban ones fell. Ultimately, land values reflect the shifts in the values of many things. So rising fuel prices would be expected to have the effect of making fuel-guzzling neighborhoods less desirable and fuel-sipping ones more desirable. We’re starting to see that pattern now.

Today’s top news story on Sightline Daily’s news page describes the way the subprime mortgage crisis is slamming suburban real estate. A similar story ran earlier in the Atlantic Monthly, as Kristin pointed out in today’s editor’s note.

Meanwhile, in Seattle at least, property values are holding strongest in the ring of walkable neighborhoods circling downtown, as the Seattle PI reports.

Reporter Aubrey Cohen notes a shift among buyers toward walkable neighborhoods:

“Many prospective buyers say they want "walking neighborhoods," [real estate agent Stacey] Brower said. "They want to be able to get up on Saturday morning and walk to a coffee shop and get a paper, or walk to a restaurant on Friday night."

“[Realtor Bob] Melvey also has noticed an increasing interest in walkability over the past five years, he said. "It's really wanting to be walking distance to a sense of community."