$2.50

Today I’ve got a simple observation to share with you. I was browsing through some data about historical gas prices, when I found some interesting graphs from the Energy Information Administration. Immediately something jumped off the page at me: when looking at historical inflation-adjusted gas prices, every time the price goes above $2.50 we’ve had a major economic meltdown. Below you’ll see the same graph reformatted to fit this page.

Historical gasoline prices adjusted for inflation

The data shown on this graph is staggering. You can see the points in time that I’ve highlighted, and I’m sure you can see the obvious pattern in our economic behavior. Thinking back to recent history, we’ve had a tepid recovery since the big crash in late 2008. What happened? Well, gas prices plunged back under $2.00 a gallon, but have since been steadily creeping back up.

Now prices are hovering around $2.61 a gallon – and what is our economy doing? Mostly it’s sitting still, and many economists aren’t that optimistic about the future.

Could that be because nobody expects energy to get much cheaper than it is now? The EIA expects petroleum prices to rise steadily (2010 Forecast Report – PDF) over the next 30 years. And while the US may be getting more energy-efficient, China, India and Brazil are more than making up for the difference in terms of world demand.

Economists aren’t talking about it in these terms, of course. But maybe they should be.

This is the real problem with an automobile-dependant nation. We are the most auto-dependant nation there is, and we’re the heart of the global economy, so we’ve dragged everyone else down with us. Certainly high energy prices hurt other nations as well, and certainly there are a broad number of compounding circumstances.

But remember what was happening at the very beginning, when this all got started… Californians who were averaging two hour commutes (one-way) in order to be able to afford a “nice” house began to default on their mortgages as gas prices in California crept past $3.00, and as they passed $4.00 the trickle of foreclosures became a flood. From there, the world’s thinly stretched and infinitely interconnected banking system began to collapse.

Still to this day we see that the varying gas prices by region offer a nearly perfect mirror to the recent economic health of various regions of the country. Consider this map:

US gasoline prices by county

What do we see? Texas is outperforming the rest of the US economically – and we’re also the most significant urban state where gas prices have been staying under $2.50 for much of the past 5-8 years.

It shouldn’t be surprising that the relatively unobstructed geography and low gas prices would make a recipe for economic health. Our nation is hard-wired for building suburbia – and we have been since FDR first began orienting federal policy that direction in the 1930′s.

The problem is, building suburbia is no longer a sustainable economic driver. Even in Texas, the physical reality of drive-times and traffic jams are slowly undermining the suburban model – and in many other major urban centers there are geographic limits that pose a third obstacle. But more importantly, world energy supply is not sufficient to sustain the low energy prices this model of development requires.

We have only one choice – to learn how to build (and rebuild) our cities for a low-energy lifestyle. Only then will we be able to create a new economy that can thrive in the harsh economic reality of expensive energy. The good news is, building low-energy cities isn’t hard! The US was the best in the world at building low-energy cities from its colonial days to the 1920′s. Our historic small towns and city centers are already engineered this way.

The Congress for the New Urbanism is the leading body advocating a return to pre-1930′s neighborhood planning and design standards. If you’re interested, you should check out the national organization (cnu.org) and the local chapter (cnu-houston.org).

I’On Village, near Charleston, SC – a New Urban community

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CNU has been hard at work to build new communities that use the old model, achieving vastly better energy and land-use efficiency than conventional suburban neighborhoods. And the best part? They look and feel like the best neighborhoods – not mundanely modular or over crowded – but vibrant, unique, and beautiful. That’s the better future we have to look forward to when we learn to design our cities and towns for people, not just for cars, and in the process unchain our economy from the price of gasoline.