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Drop in U.S. driving last 8 months exceeds the 1970s’ total decline

By Joe Romm on August 14, 2008 at 8:29 am

"Drop in U.S. driving last 8 months exceeds the 1970s’ total decline"

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June 2008 saw another sharp drop in vehicle miles traveled (aka VMT) according to the Federal Highway Administration’s monthly report on “Traffic Volume Trends.”

Americans drove 4.7 percent less, or 12.2 billion miles fewer, in June 2008 than June 2007 — beating the record-setting drop of March (see here).

Since last November, Americans have driven 53.2 billion miles less than they did over the same period a year earlier — topping the 1970s’ total decline of 49.3 billion miles….

The moving 12-month trend-line is startling and again makes clear $4 a gallon is the first (but not the last) genuine tipping point for U.S. drivers:

july2008.jpg

I think that the WSJ‘s Environmental Capital blog has accepted a US-centric view that misses the key point with their post, Driving’s Really Down–But For How Long?

The big question–will the driving downturn last? Oil prices have already come down more than 20% in the last month, and gasoline prices are falling too (if more slowly). The travel industry thinks people are getting used to pricier gas, and thinks there’ll be a rebound. From AP:

Travel Industry Association spokeswoman Cathy Keefe said the June driving decline “is not surprising, given the environment that we were in.” But she was optimistic that the recent drop in gas prices to below $4 a gallon in many parts of the country will have travelers on the road again. “I think people have started to take the increase in gas prices somewhat more in stride,” Keefe said.

Higher oil prices stunted demand, which in turn have helped bring oil prices back down. Now what?

Americans have cut back on oil consumption about 800,000 barrels a day in the first half of this year. But global demand had been rising 1 to 1.5 million barrels a day each year for a while now. So unless the United States keeps reducing demand at this pace — which is obviously quite unlikely absent a major push to fuel-efficient or alternative fuel vehicles — we will very rapidly find ourselves back in the supply-demand mismatch that drove oil prices up to record levels in the first place.

It is time for the media and the MSM’s “experts” and politicians to take off the rose-colored glasses once and for all — the price of oil is now not in the control on US consumers or even the Saudis. We are headed toward $6 gas and $8 and then higher. Whether it occurs in two years or five years or 10 years depends primarily on whether the world falls into a global recession or, on the other hand, whether there is yet more conflict in oil rich regions.

Who is going to tell the public this truth?

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10 Responses to Drop in U.S. driving last 8 months exceeds the 1970s’ total decline

  1. Earl Killian says:

    I suggest that crude oil prices are still somewhat in the control of US, though not from US gasoline usage alone. As you indicate, global economic activity levels could significantly affect crude oil prices, and a recession in the US is likely to affect global economic activity.

    Also, the dollar has increased by 7% against the euro in the last month, which is part of the reason for the decrease in the price of crude oll (7% is about $8). In the short term, I expect oil to decline a bit more as global economic activity declines.

    In the longer term, the biggest effect on crude oil prices is likely to be the race between efficiency (e.g. CAFE, PHEVs) and increasing global VMT. Any sane US President would stop restraining the EPA and CARB. That could lead to 25% of the US vehicle fleet being PHEVs in 2030, which could represent over a million barrels a day being saved in 2030.

  2. charlie says:

    This is triple misleading.

    First, the VMT. It’s not a perfect measure –several hundred points across the country are measured for traffic density — although no body disputes that US driving is down. But these VMT numbers are being pushed out by the DOT to make an argument for toll roads and congestion pricing. They want to claim that the gas tax is collapsing so they need more money. It is better to look at the Visa/MC numbers, or just overall petroleum numbers, to get a sense of how much less Americans are driving.

    When you look at gas tax revenue, it is down 1.5%. Yes, that is about 800K b/d of oil — a huge amount, but what it represents is not a tipping point. This is just large SUVs not being used for daily driving. I remember an old canard from Harpers that an improvement of 1 MPG by every SUV in the US would save 800K b/d of oil. Even if you accept the VMT miles, it comes out to something like 10 miles less per month for every car in the US, which is not a significant number.

    Finally, 800K b/d drop in demand in the US is huge. To give you an idea, that is about the level of TOTAL chinese petroleum imports — and keep in mind that the bulk of Chinese petroleum use in still electricity production. Demand in the Middle East is up, but these are not significant markets. Why do I call that misleading? Because marginal improvements of VMT and MPG in the US have huge implications for global markets — and proponents of hybrid cars don’t want us to believe that. Moving from v8 SUVs to 4 cylinder cars is a great good than moving to plug in hybrids.

  3. Dano says:

    Despite charlie pooh-poohing the numbers, he has inadvertently made a good point that should be hammered: cutting out one trip with the SUV saves a TON of miles and gasoline.

    All that soft, pandered Americans have to do is change their thinking habits a bit. That is: think. Think about chaining trips and driving a little less, and see what happens?

    Best,

    D

  4. charlie says:

    Dano — my pooh-poohing the numbers is just pointing out that the DOT political leaders have an agenda here — pushing tolls before they leave the office.

    And yes, these marginal improvements are huge, given the size of the US market. Again. if we take Obama’s advice, check out tires, and save 1 MPG, that is probably going to save 1 million b/d of oil a month.

    Or better yet, push towards a future where we drive like the Brits: about 9000K miles a year, rather than the 14K we are driving now.

  5. Lamont says:

    I drive a little under 8k miles a year on a 30mpg hwy 4-cylinder, and i bought the car used 7 years ago.

    switching to a hybrid probably wouldn’t save me enough emissions to offset the production of the vehicle itself.

  6. Barky says:

    What bothers me is the high prices of gasoline & diesel will not continue long enough to permanently change behaviors.

    People can make short-term adjustments to get past a crisis, but will then quickly revert if the crisis abates. If prices continue to fall, pent-up demand for egregious road trips will push gasoline usage higher yet again, and put us right back where we were energy-wise.

    This has been the pattern for decades. People get worked up about a gas price spike, and cut back for a short time. Then prices drop slightly and we go back to normal. Then prices creep slowly but that’s OK, because by then we’re used to it.

    I’m suggesting that three months of high gas prices is not enough to permanently change behavior or buying habits.

  7. charlie says:

    Barky — I agree. What a three month spike (on top of two years of more gradual inflation) in gas prices does is make people get rid of SUVs and cut down a little in driving.

    I bring up the UK model: 9K miles a year. Gas prices in the UK are in the $9 a gallon range. If you think there is a correlation between gas prices and miles driven, that would take a $5 in taxes to get up to that price point.

    In reality, I think a gas tax of $3-$4 in the US might cut driving back to a 9K miles point.

    But as Lamont point out, at 9K miles a year a hybrid or plug-in car doesn’t make economic sense for most people — as long as those cars are being priced at a premium.

  8. Dano says:

    In reality, I think a gas tax of $3-$4 in the US might cut driving back to a 9K miles point.

    Although work trips are only ~25% of all trips, they are a much larger share of VMT, due to the live-work gap.

    I agree that gas is too cheap, but the bottom two income quintiles in this country would be in a world of hurt. The taxes must go up slowly, to enable alternatives to auto dependency to be emplaced.

    Best,

    D

  9. Barky says:

    Dano, you’re right about the lower income folks being more negatively impacted by high gas prices. Before any gas taxes are increased, public transportation needs to be fully funded. Example: how much of the nation’s population is effectively (note the word “effectively”) served by rail? 15%? Buses are probably a bit better, perhaps 40%, but in sufficient quantities to outright eliminate the need for work commuting?

    It would be patently unfair to raise gas taxes without buttressing our public transportation systems.

  10. sikiş says:

    Americans have cut back on oil consumption about 800,000 barrels a day in the first half of this year. But global demand had been rising 1 to 1.5 million barrels a day each year for a while now. So unless the United States keeps reducing demand at this pace — which is obviously quite unlikely absent a major push to fuel-efficient or alternative fuel vehicles — we will very rapidly find ourselves back in the supply-demand mismatch that drove oil prices up to record levels in the first place.