Traffic Volume Continues To Drop in November; New Record: An Annual Decline of -112B Miles
The Federal Highway Administration reported today (direct link here) that travel during November 2008 on all U.S. roads and streets fell by -5.3% compared to November 2007. This drop marks the thirteenth consecutive month of traffic volume decline compared to the same month in the previous year. Travel YTD through November 2008 also fell by -3.7% compared to 2007.
The thirteen consecutive monthly declines (November 2007 through November 2008) in miles driven compared to the same month in the previous year represents one of the most significant adjustments to driving behavior in American history.
On a moving 12-month total basis, traffic volume in November fell to 2,894 billion miles, the lowest level in almost five years - since January of 2004 (see chart above), and this measure of traffic volume fell in every month of 2008.
Bottom Line: The moving 12-month total traffic volume in November 2008 (2,894 billion miles) is below the November 2007 level (3,006 billion miles) by 112 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 $19 billion for American consumers and businesses.
That's in addition to the much larger $325 billion estimated annual savings for consumers and businesses from the drop in gas prices from $4.12 per gallon to $1.82 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 $325 billion estimated annual savings for consumers and businesses from the drop in gas prices from $4.12 per gallon to $1.82 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).
19 Comments:
miles driven increased during previous recessions?
i wonder how the "miles driven" statistic performed during the depression.
what is the real significance to economics? does this exemplify a shift from car transport to bus, train, and airline? from tractor trailer to train?
that fewer miles are driven does not imply lower energy consumption or lower cost, they may just have shifted to another mode of people and goods movement... and that other mode of movement will have experienced an increase in usage... thus translating into a shift from one energy-consuming mode to another.
"that reduction in miles driven represents an annual savings of almost $19 billion for American consumers and businesses"...this is pretty simplistic. Miles driven by businesses...for example, local delivery vans or people making sales calls...are connected to *revenue*, not just cost. Would you argue that if an airline's passenger volume falls in half, it is saving money because its costs for jet fuel go down?
This also drains at least $53.7 billion from state government coffers. It's actually worse than that because it does not include any sales taxes that would've been charged on those 112 billion gallons of $3 gas.
I'm sure this has some politicians scrambling because a decline in the price of gasoline is bad enough, but a decline in the actual miles being driven is a catastrophy! It even thwarts "tax-by-mile" schemes.
That dollar figure is WAY off (on the high side). As you can see, I got ahead of myself and assumed 112 billion "gallons" instead of miles.
Still, I think the point stands.
Is this REAL miles? i.e. miles per capita? I'm thinking that version would be more interesting.
http://www.youtube.com/watch?v=IWvXBbB11S0
Our view on how America can create an additional $13billion.
Uh oh Prof, it looks like job claims are now worse than 1980. And there is no end in sight.
Are you finally willing to throw in the towel as the last Pollyanna (along with Larry Kudlow)? This is worse than 1980.
Once you come around to that I think it'll finally be time to buy stocks.
The labor force and population are about 50% higher now than in 1980.
Anon @ 11:48 is right about Road taxes. Here in Nebraska they will jack up our highway tax another 4 cents a gallon because they are being 'cheated' due to a cutback in consumption. I think that will put us up in the neighborhood of 34 cents/gallon of state tax on our fuel.
"i wonder how the "miles driven" statistic performed during the depression"...
What percentage of citizens owned a car during the Depression as compared to today?
"Would you argue that if an airline's passenger volume falls in half, it is saving money because its costs for jet fuel go down?"...
Yes YOU can because airlines drop multiple flights to the same destination, hence a fuel savings...
BTW though it not hardly a good thing an emptier plane burns less fuel...
"This also drains at least $53.7 billion from state government coffers. It's actually worse than that because it does not include any sales taxes that would've been charged on those 112 billion gallons of $3 gas"...
Oh dear! Now that's a real shame...-:) LOL!
Great point!
So what the possibility that the parasites in government dumping some of the costs, the unnecessary costs such as those socialist safety net programs?
"Anon @ 11:48 is right about Road taxes. Here in Nebraska they will jack up our highway tax another 4 cents a gallon because they are being 'cheated' due to a cutback in consumption"...
Time to vote the parasites out then, right?
"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 $19 billion for American consumers and businesses."
It makes sense that the number of miles driven increases when fuel efficiency increases. So what would drive the number of miles driven down? Well high gas prices! Those are $19 Billion saved - it's $19 Billion dollars Americans didn't have to spend on gas. Instead they were investing in screwy ARMs. For MP to call this a "savings" is a misrepresentation. Money not spent - and never owned - is not savings.
What difference does it make if this is worse or better than the 80s in terms of indicators? The bottom line is that it sucks for some people - and that number of "some" is increasing. So instead of arguing that we're not in bad shape right now - why isn't Mark offering solutions? Perhaps because it's easier to deny a problem exists than it is to solve it - you can't be wrong if you've always got your head in the sand. Or in the case of Carpe Diem, head in historic sears catalogs.
Since you are now using Calculated Risk charts, here is an other chart showing the year over year change.
"Yes YOU can because airlines drop multiple flights to the same destination, hence a fuel savings"...right. But this is not a good thing for the airline because the decline in revenue does more harm to the P&L than the fuel savings helps.
Is this REAL miles? i.e. miles per capita? I'm thinking that version would be more interesting.
That version would be more dramatic, certainly. Since the population has gone up, any decline in vehicle miles traveled would be even steeper per capita.
"But this is not a good thing for the airline because the decline in revenue does more harm to the P&L than the fuel savings helps"...
No argument david!
It was my Al Gore throw away line...:-)
I think VMT close tracks GNP.
Anybody want to check?
Hydra
Mark,
A decline of traffic worth $19b 'causes' a decline in gas prices worth $325b.
Not completely fair comparison but let's follow the idea:
- How much us$ would it save if the US would increase fuel efficiency with 1%
- How much us$ would it save if the US would decrease traffic with 1%
This is not the complete answer, because one has to compare $-for$, but it asks the question:
- Is it more efficient to raise the gas tax or to encourage (*) people to relocate closer to their work?
(*) encourage as in city zoning laws, less suburbia, more high rise, shorter commute etc.
Richard, a far more effective way to do things is to create encourageements for businesses to stagger their "start of business day" times more. By changing the time businesses open from a consistent "9am" to a variant of 8am-10am (say, 8am, 8:30am, 9am, 9:30am, and 10am) the amount of savings, both in road expansion expenses, human time+gasoline wasted sitting in traffic jams, etc., etc., would be quite substantial.
Most businesses don't need to be in complete lockstep with all others (part of the day is spent in setup and breakdown as it is -- and some can just stagger their workforce arrivals to maintain a wider range of operating hours, with the same dispersal of traffic effect).
Imagine if the traffic on the road in the morning when you go to work was 1/5th of what it is now?
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