One of the political obstacles to a gas tax is that it will disproportionately harm residents of rural and suburban areas relative to cities. City residents who take public transport won’t be directly affected by gas taxes. Furthermore, in the city public transportation is a possible substitute for driving, so that even city residents who drive now will often have the choice of an alternative mode when gas prices go up. In contrast the only way rural and suburban residents can usually mitigate the effects of higher gas prices is to change their behavior in usually costly ways, like finding a new job, moving, or purchasing a higher mpg vehicle.
As a result of this disparate impact on transportation costs for city versus rural and suburban residents, one possible long run result is that people will respond to higher gas prices by moving to the city from rural areas and suburbs. This raises the question of how this will affect housing markets in these areas. A new paper sheds some light on that issue:
By raising commuting costs, an increase in gasoline prices should reduce the demand for housing in areas far from employment centers relative to locations closer to jobs. Using annual panel data on a large number of ZIP codes and municipalities from 1981 to 2008, we find that a 10 percent increase in gas prices leads to a 10 percent decrease in construction in locations with a long average commute relative to other locations, but to no significant change in house prices. Thus, the supply response may prevent the change in housing demand from capitalizing in house prices.
…However, we find suggestive evidence that house prices do respond to gas prices in locations where the supply of housing is constrained.