Traffic Volume Continues To Decrease in October; New Record Set for Annual Decline of 100B Miles
The Federal Highway Administration reported today (direct link here) that travel during October 2008 on all roads and streets fell by -3.5% compared to October last year. This drop follows the -4.2% September decline. Further, October marks the twelfth consecutive month of traffic volume decline compared to the same month in the previous year. Travel YTD through October 2008 also fell by -3.5% compared to 2007.
The twelve consecutive monthly declines (November 2007 through October 2008) in miles driven compared to the same month in the previous year is close to a record, and represents one of the most significant adjustments to driving behavior in history.
On a moving 12-month total basis, traffic volume in October fell to 2,907 billion miles, the lowest level in almost five years - since February of 2004 (see chart above), and this measure of traffic volume has fallen in each of the last nine months.
Bottom Line: The moving 12-month total traffic volume in October 2008 (2,907 billion miles) is below the October 2007 level (3,007 billion miles) by 100 billion annual miles driven, the largest annual decline in FHA history (data go back to 1971). At an average fuel efficiency of 20 m.p.g., and an average gas price of $3.39 per gallon over that period (data here), that reduction in miles driven represents an annual savings of almost $17 billion for American consumers and businesses.
That's in addition to the much larger $350 billion expected annual savings for consumers and businesses from the drop in gas prices from $4.12 per gallon to $1.67 since July (gas price data here), since American consumers and businesses save about $1.42 billion annually for every penny decrease in gas prices (see calculation here).
That's in addition to the much larger $350 billion expected annual savings for consumers and businesses from the drop in gas prices from $4.12 per gallon to $1.67 since July (gas price data here), since American consumers and businesses save about $1.42 billion annually for every penny decrease in gas prices (see calculation here).
Thanks to John Thacker for the FHA update.
4 Comments:
One of the interesting things about these numbers is that October gas prices, according to the EIA, had already dramatically declined. In fact, they were only 20 cents higher than one year ago, in October 2007. And yet we still had a massive 3.5% decrease. The economy doesn't really explain it either-- previous recessions have slowed the growth of VMT, but not to that extent.
Inertia.
Seriously. High prices for a day, no effect. High prices for foreseeable future, buy a Civic. Prices go down...still drivin' the Civic.
You're being lazy professor. What are the PER CAPITA traffic volume numbers? Just like real money, we need to show the "real" traffic. I'm thinking it'll paint an even more dramatic picture.
Anonymous, oh, absolutely that plays a part. Only economists would tend to call it "the different between short-term elasticity of demand and long-term elasticity of demand." But these numbers are for vehicle miles driven, not gasoline consumption. A lot of people who bought a Civic instead might well be expected to drive a similar amount of miles in their new car as in their old one. (Some might even expect that in some cases when gas prices went down they'd drive even more, since the cost of driving is lower with better MPG.)
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