Saturday, March 24, 2012

Traffic Volume Rises in January by 1.6%, Largest Gain in 15 Months, But Gas Consumption is Falling?

Steve Hayward and Charles Hugh Smith have recently pointed to falling gasoline consumption, based on these EIA data that show a steep drop in retail gasoline sales in November and December. Some are saying that this drop in gas consumption signals a decline in economic activity with the possibility that we're headed towards a sharp contraction and double-dip recession. 

But the recent Federal Highway Administration report on monthly traffic volume is telling a much different story of fairly large increases in monthly vehicle miles for the months of December (1.3%) and January (1.6%) compared to their year-ago levels (see chart above).  The 1.6% increase in January to 224.8 billion vehicle-miles from 221.3 billion a year ago is the largest monthly increase since October 2010.  Further, the moving 12-month total of vehicle travel increased in both December and January, following 9 straight months of decline. 

I'm not sure how to reconcile these two completely different stories of falling gas consumption but rising travel volume - how can that happen?  Perhaps the January gasoline consumption data (not yet available) will show a rise?  

41 Comments:

At 3/24/2012 8:08 AM, Blogger Reliapundit said...

LESS PEOPLE FLYING...

AND CARAVANS OF PEOPLE FLEEING BLUE STATES!

 
At 3/24/2012 8:15 AM, Blogger VangelV said...

I'm not sure who to reconcile these two completely different stories of falling gas consumption but rising travel volume - how can that happen? Perhaps the January gasoline consumption data (not yet available) will show a rise?

Perhaps it will. But given the problems with all kinds of data being released from the government I do not understand why you would expect to see anything consistent in the first place. After all, the government is saying that there is no food inflation while the management of food companies are talking about an input cost increase of 10%. The BLS is showing 8% unemployment but it refuses to count the underemployed and those that have given up because they can't find jobs.

I think that you will figure out eventually that the data being reported by the US government is no more trustworthy than the data that was being reported by the government of the USSR or Japan. All politicians put pressure on government agencies to 'adjust' the reported indicators in order to paint a favourable picture. You may not like that reality but that is the way it is.

 
At 3/24/2012 8:23 AM, Blogger Rufus II said...

No, I follow this every week at This EIA website.

Gasoline Demand is, and was during that period, steadily falling.

What is happening is: Sales of SUVS, and Pickemup Trucks are, and have been, plunging while sales of more fuel efficient cars has been on the rise.

Also, many families have a choice of taking a "small" car, or the SUV to do their chores, and more people are leaving the Big'un in the driveway for their trip to the dry cleaners, etc.

 
At 3/24/2012 8:25 AM, Blogger Larry G said...

sounds like you need a "market" in economic statistics, eh?

why depend on the gov for lousy, contradictory data?

Govt gets much if not most of this data - ultimately from private sources, doesn't it?

Why doesn't Heritage or CATO or similar group put up their own "competitive" site to the govt blather?

 
At 3/24/2012 8:36 AM, Blogger Charles Platt said...

Maybe people allowing themselves to run lower on gas before refilling the tank (in response to rising prices). The residual quantity of gasoline in all vehicle tanks, multiplied by the number of vehicles, would be nontrivial. If the reduction in average residual gasoline volume per tank was just a couple of gallons, this might show up in a monthly statistic.

 
At 3/24/2012 9:35 AM, Blogger morganovich said...

of the 2, the gasoline data is by far the more reliable.

the FHA data is a crude estimate based on a few thousand traffic monitoring spots.

it can easily be distorted (especially in rural) if they are non representative or if some number of the spots get moved.

the notion that this is being driven by fuel efficiency seems questionable to me.

the ratio of light trucks sold to passenger cars has not moved much and it is not nearly enough to alter the whole fleet so much in a couple of months.

when you have one set of hard data (like gasoline) where the units are actually counted and one where it is an estimate, it seems sensible to trust the hard data over the estimate when they diverge.

 
At 3/24/2012 9:48 AM, Blogger Scott Gustafson said...

The blending credit for ethanol went away in January so there may have been an increase in November and December to take advantage of the last of the credit. No idea how this might have impacted the numbers but it's the only correlated event I can see.

 
At 3/24/2012 9:52 AM, Blogger Gene Hayward said...

VERY empirical, but i will confim this for myself and others i know.

 
At 3/24/2012 10:00 AM, Blogger Rufus II said...

If you will go to This Bloomberg Page

you will see that "truck" sales went from almost 60% of Total vehicle sales in Dec to about 52% in Feb.

 
At 3/24/2012 10:13 AM, Blogger morganovich said...

rufus-

it's a volatile stat by month.

http://wardsauto.com/keydata/historical/UsaSa01summary

download the dataset. (button at the top)

trucks outsold cars by nearly 900k units in 2011 a wider margin that any of the last few years.

you have to go back to 2007 to find a wider spread.

one or two months of movement is not enough to have any appreciable effect on the overall mileage of the US fleet.

there are 255 million light vehicles in the US. a couple 100k one month is not going to shift the average.

there is just no realistic mathematical way to have 1-2 months of buying behavior affect the mileage of the US fleet as a whole in a material way.

 
At 3/24/2012 10:15 AM, Blogger Rufus II said...

Actually, my link doesn't take you where you need to go. You have to click on Mar 1.

 
At 3/24/2012 10:27 AM, Blogger Rufus II said...

Your point is valid, Morgan, but keep in mind that 10% of miles driven are represented by cars one year old, and newer.

Also, I would posit that the surge of buyers going to more fuel efficient autos is indicative of an overall mood of conserving.

 
At 3/24/2012 10:33 AM, Blogger rjs said...

a 4 part series answering thse questions:

http://feedproxy.google.com/~r/blogspot/Hzoh/~3/3VnmYUi2nzw/has-america-lost-its-drive-pt-4.html

 
At 3/24/2012 10:55 AM, Blogger morganovich said...

"Your point is valid, Morgan, but keep in mind that 10% of miles driven are represented by cars one year old, and newer."

where are you getting that stat?

assuming it is correct, we then need to look at the avg mileage of the us fleet, which has not moved much.

it was 22pmg in 2000.

it was 23.4 last year.

so even if every new car replaced one 11 years old (about the average age of the us fleet) the 13 million cars sold last year were only 5% of the fleet and some were first cars and many previous vehicles are still being driven. you sell your 5 year old car and get a new one, but someone else buys the car you sold and drives it.

the us fleet is not gaining much fuel efficiency year to year and a barely perceptible amount month to month.

it's difficult to see how that could be driving such a large divergence between gasoline consumption and miles driven.

i'm not sure what the answer is, but i would guess it lies predominantly elsewhere.

 
At 3/24/2012 11:05 AM, Blogger morganovich said...

"Also, I would posit that the surge of buyers going to more fuel efficient autos is indicative of an overall mood of conserving."

perhaps, but given that the truck to car spread widened in 2011, it seems like it may be a bit premature to be making that claim.

the top 2 selling vehicles in the us last year were f-150's and silverados.

there is certainly a subset of folks buying more fuel efficient cars, but the top sellers remain trucks whose engines have been getting really large. trucks are the new muscle cars and many have 6+ liter engines.

there seems to be a trend towards slight increases in mileage and big increases in horsepower in many vehicles.

i've certainly seen it in my own vehicles.

i doubt i'm getting 16mpg from my suv, but man did they up the power.

550 hp used to be the realm of a few supercars, but it's easy to find it in an suv now.

 
At 3/24/2012 11:18 AM, Blogger Rufus II said...

If I'm not mistaken, slightly more than half of Ford's pickup sales last year were 6-cylinders, with most of those being of the Eco-boost variety.

I imagine fuel economy got worse from 2000 to 2007.

 
At 3/24/2012 11:43 AM, Blogger morganovich said...

http://www.bts.gov/publications/national_transportation_statistics/html/table_04_23.html


"I imagine fuel economy got worse from 2000 to 2007."

that is not correct.

mileage rose from 21.9 to 22.9.

 
At 3/24/2012 11:50 AM, Blogger morganovich said...

also:

even an eco boost f-150 gets 16 mpg city and 22 hwy. in real driving you probably get 18.

the old 5.0l got 15/21. it's really not much of an improvement.

 
At 3/24/2012 11:51 AM, Blogger Benjamin said...

The USA has reached Peak Demand for oil, as Europe and Japan did long ago (seriously, oil demand has been falling in Europe and Japan for 20 years).

We should have taxed gasoline a long time ago, but rural states don't like that, and so we cannot have a sensible energy policy. We have the even greater market distortion of mandated ethanol.

Nevertheless, at more than $100 a barrel, global demand for crude oil starts to flatline. Look for natural gas, biofuels and conservation to make up the difference.

The price signal works miracles.

 
At 3/24/2012 12:11 PM, Blogger Rufus II said...

Average Sales-weighted MPG Oct '07 to Nov '08

20.2 to 22.7

 
At 3/24/2012 12:11 PM, Blogger Ron H. said...

"where are you getting that stat?"

I suspect it's from this usual source.

 
At 3/24/2012 12:15 PM, Blogger Rufus II said...

Spot Price at St. James, La was $130.47, Yesterday

I don't believe oil demand did much "flat-lining" at $100.00, Benji.

 
At 3/24/2012 12:34 PM, Blogger Ron H. said...

morganovich,

With no other support than my own "usual source", I have two observations that I think affect gasoline consumption as it relates to new cars:

1 - Although newer cars may be getting better mileage, I suspect people drive their newer car more than their older ones, offsetting potential decreases in gasoline consumption.

2 - Without relying on anything except what I know of human nature, I suspect that new F150 with Eco-Boost spends a lot more of the time with its foot-feed on the floor, than the boring old slug that got traded in, at least until the novelty wears off.

Turbo usage and good gas mileage don't occur at the same time.

 
At 3/24/2012 1:33 PM, Blogger juandos said...

"I suspect it's from this usual source"...

LMAO!

Ahh ron! ron! ron!

Now that was funny...

Still speaking of funny stats, I wonder how closely economic activity would plot up against the historical price of gasoline over the last 96 months if at all?

 
At 3/24/2012 1:33 PM, Blogger morganovich said...

rufus-

that's just for new cars.

they are only a portion of the fleet. you're not going to see an overall move that sharp.

further, that had a lot to do with the drop in truck sales as a %, a trend that has reversed.

ron-

actually, turbos do tend to up mileage.

they let you use a smaller engine which gets you better mileage on the highway when you are not accelerating and tend to weigh less, which helps as well.

i had a turbo porsche with 297 hp.

it got MUCH better mileage than the 333 hp m3 i switched to (inline 6, normally aspirated).

the new x5m has twin turbos, but a considerably smaller displacement that the old 4.8l x5. (it's 4.4)

this, despite a HP jump from 390 to 555, it lost only 1mpg in highway mileage.

at equivalent horsepower, it would be much more efficient (and maybe a 3.5l displacement)

that's why so many big trucks use turbo diesels.

 
At 3/24/2012 2:32 PM, Blogger J Scheppers said...

As a Civil Engineer and wanna be economist, I have been following the VMT trends for past five years. First lets compare the Dec 2011 Report to the Jan 2012 Report. You can see at the end of each year they perform adjustments based on "new information". You can see that in the Dec 2011 report that the January 2011 US VMT was 224 billion and it was revised in the Jan 2011 report to 221 billion (Jan 2011 data in Jan 2012 report). Over 80% of the Jan '11 to Jan '12 change is accounted for in the revision to Jan '11 numbers. These revision indicate to me that the accuracy of the data is not great enough to make claims on the monthly data.

I would point to a new trend of decoupling of GDP from VMT as technology is coming on line.

I think the more efficient car while not the whole story is a natural market reaction to higher fuel prices. I personlly increase my mpg's by 50% in a vehicle change in January 2012.

I think the most interesting trend though is that according to the FHWA January 2012 total VMT is at the same levels as May 2004. People are driving less and finding more efficient ways to interact beside driving. I by no means want to say the independent vehicle is going away, but it is subject to market forces.

 
At 3/24/2012 2:47 PM, Blogger Larry G said...

Another thing you can look at to calibrate is gasoline taxes which in some states is not indexed and static according to number of gallons sold.

gas taxes, in general, have been declining in part because of less driving but also because..the higher the price of gas goes..the more folks will buy an increased efficiency vehicle to compensate.

this is especially true for cars that are driven in daily commutes where people know exactly how much they pay per day for their commute.

 
At 3/24/2012 4:52 PM, Blogger morganovich said...

js-

that diving miles number may also be significantly affected by population patterns.

if more people live in cities, then they would be expected to drive a great deal less.

my understanding is that demographics have favored a return to urban cores from suburbs for the last decade or 15 years.

that may well be why miles are dropping.

i agree with you that miles driven is a lousy gdp proxy.

 
At 3/24/2012 5:24 PM, Blogger Craig Howard said...

you will see that "truck" sales went from almost 60% of Total vehicle sales in Dec to about 52% in Feb.

52% is nothing to sneeze at and that drop over a couple months wouldn't even cause a ripple in the average of the total number of vehicles on the road.

 
At 3/24/2012 8:50 PM, Blogger kmg said...

I'm not sure who to reconcile these two completely different stories of falling gas consumption but rising travel volume -

1) Cars are vastly more efficient now, than 10 years ago.

2) Expensive gasoline means people are using their sipper more and keeping the SUV only for specific, infrequent use.

 
At 3/24/2012 10:14 PM, Blogger Unknown said...

This comment has been removed by the author.

 
At 3/24/2012 10:15 PM, Blogger Unknown said...

An important thing everyone seems to be forgetting: This has been a very mild winter weather-wise. Plus, last winter was fairly brutal, making year-over-year comparisons quite favorable. Less snow = fewer people holed up in their houses = more people able to go out and drive.

Also, there was an article in Wednesday's WSJ about this topic. The gist is, there are likely problems with the EIA's data. Last year they seem to have underestimated the amount of gasoline which was exported, which resulted in an over-estimation of the amount of gasoline consumed domestically. They've made progress in correcting the problem, but this year's gasoline consumption numbers are now being compared to ones last year which were probably too high. Analysts in this article said the decline in gasoline consumption is probably more like 2-3%.

 
At 3/24/2012 10:15 PM, Blogger VangelV said...

What is happening is: Sales of SUVS, and Pickemup Trucks are, and have been, plunging while sales of more fuel efficient cars has been on the rise.

But that is not very important over the short term because the number of new vehicles is small compared to those that are already in operation. It takes quite a while for auto sales to register. And the last time I looked light truck sales were still around the same level as they were a year ago.

 
At 3/24/2012 10:19 PM, Blogger VangelV said...

you will see that "truck" sales went from almost 60% of Total vehicle sales in Dec to about 52% in Feb.

But the number of light trucks sold is still at the same that it used to be. The fact that more vehicles were sold than the year before could mean that there are more vehicles in operation than a year ago. (Depending on the number of vehicles that have been junked.) You simply do not have enough data to show anything one way or another. The data that you use is simply used to spin a narrative but cannot really support it because it is not complete. I still think that the overall data is suspect and would not believe the miles driven estimate.

 
At 3/24/2012 10:22 PM, Blogger Henry H said...

I wonder how much of it is from households with multiple vehicles switching to more fuel efficient vehicles. Several of my neighbors have parked their large SUVs, while their smaller vehicles have become the main vehicle for commuting and running errands.

 
At 3/25/2012 2:25 AM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 3/25/2012 2:26 AM, Blogger Ron H. said...

morganovich: "actually, turbos do tend to up mileage.

they let you use a smaller engine which gets you better mileage on the highway when you are not accelerating and tend to weigh less, which helps as well.
"

I understand. I could have written that better by saying that gas mileage and foot-on-the-floor don't happen at the same time.

Any time I've gotten a new car that's faster, I tend to put my foot down a lot for the 1st 3 months or so.

"this, despite a HP jump from 390 to 555, it lost only 1mpg in highway mileage."

OMG, that's a hell of an increase.

 
At 3/26/2012 1:12 PM, Blogger bart said...

I use the same data source (DOT) and my chart shows a drop of 1.2% in Dec 2011 and a drop of 1.1% in Jan 2012.

http://www.nowandfutures.com/images/traffic_volume.png


And here's the correct retail gas delivery data, not the doofus and massively wrong one that Mish promoted.


http://www.nowandfutures.com/images/retail_gas_deliveries.png

 
At 3/26/2012 5:26 PM, Blogger J Scheppers said...

Bart,

It appears Perry is using one month to one month comparison 1 year apart.

It appears your chart uses 12 month moving average a year apart.

From my earlier comment, I expressed concern about reliability of one month data. I understand the trend line better with your smoothed data with moving average, but that is not to say that Perry's data is incorrect.

 
At 3/27/2012 6:54 AM, Blogger bart said...

Quite true JS on all three of my points.

Using my charts with annual change rates does remove most of the wild disparity noted by the Dr. though.

 
At 3/27/2012 3:46 PM, Blogger Hydra said...

The BLS is showing 8% unemployment but it refuses to count the underemployed and those that have given up because they can't find jobs.

==============================

But that has always been the case. The numbers are what they are, but that does not mean they tell the whole story, or are intended to. They are simply one data point, and if it moves up, that is (still) a good thing. It makes more room for those presently sitting on the sidelines.


As for gas consumption, I can easily alter my driving habits enough to save 5 MPG while driving the same distance. When prices are high, I do that, when they are not so high i drive more aggressively.

I suppose I could put a value on my time by comparing the savings in gas vs time.

 

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