>

Retail gasoline deliveries, already well below 1980 levels, have absolutely fallen off a cliff:

“Is the plunge inventory-related, i.e. are storage facilities so full that retailers are simply putting off deliveries? Though I don’t have data on hand to support this, I know from one of my correspondents who is in the gasoline distribution/delivery business that gasoline is very much a “just in time” commodity: gas stations are often close to running out of fuel when they get a delivery. Stations aren’t holding huge quantities of surplus gasoline; that’s not how the business works. Given the absence of “extra storage” in gas stations (and the fact that the number of gas stations has fallen dramatically since 1980), it is reasonable to conclude that retail delivery is largely a function of demand, i.e. gasoline consumption.

Even if you dismiss the recent plunge as an outlier, the declines in retail gasoline deliveries are mind-boggling.
-Why Is Gasoline Consumption Tanking?

>

Comment:
The Energy Information Administration approximates U.S. energy consumption by a statistic known as “weekly product supplied.”  This is the amount of petroleum product supplied to an end-user such as a gas station.  It is a very timely statistic as the last plot is through February 3.

As the chart below shows, total weekly U.S. product supplied of all petroleum products currently averages just over 18 million barrels per day, 8.5 million barrels of which is gasoline.  The rest of the total petroleum product supplied consists of fuels like heating oil, propane and kerosene (jet fuel).

>
Click to enlarge:

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Consumption of petroleum products, especially gasoline, is a broad-based economic indicator.  Increased consumption coincides with higher economic activity and lower consumption occurs in recessions, as the shaded areas above show.

The story above highlights the recent collapse in weekly U.S. gasoline consumption, which is shown below (gray line).  Weekly gasoline consumption hit 8.0 million barrels per day the week of January 13, the lowest level since September 21, 2001 (the wake of 9/11 when all travel was voluntarily reduced). It has hardly rebounded in subsequent weeks.

Note this data is very seasonal.  Highlighted on the chart are some of the recent late January/early February winter months readings which often show the lowest consumption of the year.

While some of the current January/February decline can be attributed to seasonal factors, the unusually mild winter argues against a collapse of the magnitude shown above. It suggests that something more is going on.

The chart below minimizes seasonal factors by showing the annual movement in gasoline supplied to end-users and total annual miles driven which closely tracks it (a monthly measure that is only current through last November).  Even after compensating for seasonal factors, gasoline consumption is at its lowest level since November 2003 and falling.  Total miles driven is following it lower.

While it is possible that cars are more fuel efficient which means less gas used, more fuel efficient cars would not lead to less miles traveled.  So even factoring in the preference away from SUVs and toward better MPG cars, we are still left with fewer miles being driven and less gasoline consumed, especially in the last several weeks.  A drop over this short a period of time cannot be explained by a shift to more fuel efficiency alone.

Is the Economy Really Slowing?

Economic activity almost always requires travel.  Whether commuting to work, driving to a store, getting goods delivered, or taking a vacation, more miles driven and more gasoline used means higher economic activity.  This is not controversial, as we discussed a few years ago.

So, it comes as a surprise that these measures of broad-based economic activity (gasoline consumed and miles driven) are falling hard at a time when most economists are in agreement that the economy has been getting better in recent months.  If the economy is indeed getting better, it seems to be happening while we are driving less and consuming less gasoline.  For the American economy, this is really hard to do.  It has never happened before in the data shown above.  All other instances of declining miles and gasoline consumed occurred in or around a recession.

We would not suggest that these economic indicators trump all others and the economy is actually worsening.  But it is disconcerting that these measures of critically economic activities are heading lower in a hurry.

Maybe these two measures are sending false signals, but it is possible they are really pointing the way for a faltering economy.  For now we will watch these measures and report on them in coming weeks to see if they eventually square with other broad-based measures of the economy that say things are getting better.

Source: Bianco Research

Category: Economy, Energy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

85 Responses to “What Does Declining Gasoline Consumption Mean?”

  1. gordo365 says:

    wont these statistics be significantly skewed as baby boomers retire en masse?

  2. Greg0658 says:

    wondering – do military contracts flow thru the pumps you referrence? bc traffic snarls in big cities on the tv traffic updates seem about sameo

  3. Chief Tomahawk says:

    The Baltic Dry Index–I saw it posted someplace–has collapsed. Michael Shedlock also blogged on the plunge in gasoline consumption. Could it be The Bernanke is having a problem creating demand?

    Just someone please tell me the large financial firms who received taxpayer-funded bailouts aren’t busy frontrunning The Bernanke’s liquidity bath policies by speculating in oil and gasoline, gifting an inflation tax to the taxpayer as a thank you.

  4. zzzz says:

    I commute daily from from lower westchester, down the deegan past the GWB, over the Tri Boro, down the FDR to 34th street dail for 15 years
    Gas is about the highest, tolls are for sure the hightes, and unemployent still some what high.

    My commute has been a breeze now for 3 years, especially compared to 2005,6.
    I am actually grateful for the high price of gas and tolls, beacuse if you told me for 150$ a month I could have my own lane and 1/2 an hour of each comute( an hour a day), I would gladly pay….
    That is why gas consumption is low
    want it lower yet, increase, tolls, gasoline tax, and improve mass transit

  5. Nuggz says:

    “What Does Declining Gasoline Consumption Mean?”

    Ridership for public transit is way up…..

    Furthermore, car ownership is way down..

    http://www.theglobeandmail.com/news/world/us-car-ownership-shifts-into-reverse/article1418860/

    There is an entire class of urbanites that have no interest in automobiles. The love affair is fading.

  6. lmurra says:

    Wondering if declining gasoline consumption is somehow related to a historical low of the U.S. labor force participation of 63.7%…

    Also, World Trade is down dramatically:
    http://www.zerohedge.com/news/unprecedented-global-monetary-policy-world-trade-volume-craters

  7. Gordo:
    Will they be driving that much less even in retirement?

  8. Savage1701 says:

    Being ignorant on these sorts of statistics, I also wonder if it is a function of fewer “recreational” miles driven vs. “commute to work” miles. Airline deregulation would have been coming into full force from around 1980 on. Getting into the family station wagon and driving across country for a week might be less in vogue now than it was, as opposed to a flight to a destination.

    I don’t know if fleet-delivery vehicles are counted with the gasoline consumption figures, but if internet retail is growing, demand for gasoline would fall as people are not going to the mall, they are ordering on Amazon.com and such. Given the decline in brick and mortar stores, other than Walmart or places one has to go to for perishables, perhaps this is plausible. And since the UPS or FedEx truck can be close by whether it is making 1 delivery in the neighborhood, or 100 (the route being an almost fixed cost), it might follow that if the truck stops 10 or 20 or 50 times in the neighborhood, it would consume little extra fuel stopping at those extra houses, save for the idling of the vehicle and extra loss due to constantly stopping and starting the vehicle vs. just smoothly driving in and out of a neighborhood to drop a package and leave. Expand that to a metropolitan area, and now a vehicle can stop, park, and literally offload the whole vehicle to a building of internet shoppers rather than the few who were using it for specialty delivery.

    Somehow, though, I sense that those factors would not explain away what is otherwise a troubling factor.

  9. constantnormal says:

    Who uses gasoline? The working middle class.

    Wages suck, employment sucks. I don’t think we need to look a lot further …

  10. Savage1701 says:

    Nuggz, Imurra, Phil and others:

    Interesting points as well.

    One thing seems for sure – if I am NOT on the road, I can’t stop by a drive-thru for lunch, a big-box retailer for an impulse buy of tools or home improvement, Starbucks for a pick-me-up, my video store to rent a movie, my grocery store to impulse buy when I am hungry, utilize my gym membership, etc. Even the best online retailers can’t supplant everything.

    It’s a good article.

  11. constantnormal says:

    One more possibility … a plot of the fleet CAFE mileage numbers would be useful to see alongside this chart … most cars have seen rather dramatic increases in performance in this area over the past 7-8 years …

  12. theexpertisin says:

    One thing for sure, it isn’t due to the Volt.

    What is interesting to me is how the government is going to adapt to the massive tax shortfall in fuel tax revenue. Can more toll roads, a vehicle mileage use fee, an exhorbitant tax at point of vehicle purchase and other “revenue enhancers” stick it to those who thought they were doing themselves a favor buying a high mpg or alternative/hybrid vehicle?

  13. JimRino says:

    - Hybrid and EV sales increasing yearly.
    My Honda Insight delivers 40 mpg normally, 48+ mpg on the highway at 65 mph.
    - Greater efficiency in Amazon.com / UPS/US Postal Deliveries?
    - Commercial EV trucks now available and being Purchased.
    - Commercial Hybrids now available to utilities that offer on-site power for electric tools.
    - The two tier’s of our economy:
    One relative won’t visit because 40 mile distance one way, at 10 mpg for a minivan = 8 gallons * $3.50 = $28 transit cost.

  14. Jim67545 says:

    What does it mean? Who knows? Too many variables (many mentioned above) to draw any conclusions. Need to either eliminate some or quantify their contribution to, then draw any conclusions about the relationship to the overall economy.

  15. Bill Wilson says:

    This could be more of a leading indicator than the chart makes it out to be. How many people thought the U.S. was in a recession in November of 2007?

    On the other hand, we could just be experiencing a structural decline in gasoline usage that was triggered by the great recession. People got more efficient with their fuel usage, and have stuck with it.

    I’ll stop beating around the bush; the real truth is that this is the one statistic that Obama, Bernanke, and Dimon forgot to manipulate. (I’m kidding.)

  16. constantnormal says:

    One final possibility — and admittedly, this one’s a REAL long-shot … with more and more noise being generated about “getting fit”, losing weight, and exercise, perhaps more people are simply walking to nearby (within 5 miles) restaurants. Biking seems to be surging as well … at least the streets and trails seem to be clogged with bikers that are well past youth …

    I really can’t see the US transitioning to a European-style modality in this regard, but there is clearly some change taking place … prolly not nearly enough to show up in a chart, however.

  17. flocktard says:

    As far as miles driven, that IS something of a mystery- with employment trending up, that number should rise. But if these figures are as subject to “revision” as our other stats, we may have nothing to worry about.

    The lower gas usage, I would think, is the result of ever greater efficiency, which I would think is finally making some impact. With even large sedans getting impressive MPG numbers, the transition from old guzzlers to newer efficient cars may make this an ongoing trend.

    Gasoline is now one of the USA’s main export products, believe it or not. This is after we crapped our pants silly about not having enough refining capacity 10-15 years ago.

  18. theexpertisin says:

    JimRino:

    Thanks for the great idea regarding relative visits.

  19. wally says:

    I retired a couple of months ago and am no longer driving to work. That probably explains it.

  20. rob says:

    Ok, geek moment. Since I don’t have a method in my vehicle that “reports” how many miles I drive, I have issue with the “total” miles driven data. Granted for fleets, that data can roll in at the end of tax year and the frequency would be annual, but I’m going to go out on a limb and say that is simply a proportional amount of gasoline consumption, so obviously it would dive if consumption dives. A return to thrift is certianly an option too. I recently bought an enduro “dual sport” for my commute. Still commute same # of miles per week, but instead of 13 MPG, I get 65 MPG. (and have a blast while doing it) My monthly fuel expense has dropped from $200 to $12. I’ve also heard lots of chatter about doing 3-4 grocery runs, and these same people use to do 2-3 runs a week instead of any type of planning.

  21. wally says:

    “- Greater efficiency in Amazon.com / UPS/US Postal Deliveries?”

    In my opinion, Amazon has the least efficient product delivery system yet devised by man. I could tell you about dozens of small, ounce-or-two products delivered singly in boxes that would hold the World Book Encyclopedias.

  22. Tamu82 says:

    Bit off the subject . . . has anyone notice the Barron cover from Februyary 11 calling for a 15,000 Dow? Barry, did you see this?

    http://static.seekingalpha.com/uploads/2012/2/11/1006811-13289787144151545-Paulo-Santos_origin.png

  23. Init4good says:

    agree w ‘c-normal’ Wages not rising, ppl paying down debt (less $ for joyrides), ppl out of work, ppl driving more fuel efficient vehicles, ppl traveling less for work reasons/ using teleConf versus air/ land travel, population getting older. All that adds up to significantly reduced gasoline consumption. And the supply/ demand curve is suppoed to result in reduced prices for gasoline. Either the market is being manipulated, the world really is running low on crude so production costs are up, or production is being restricted so as t oincrease price.

  24. rob,

    “I get 65 MPG.”

    that’s no bigger than 250cc, right?

  25. Julia Chestnut says:

    I’m not sure – there is a lot of noise, in addition to seasonality in the stats. I have my own personal, uneducated suspicions, though. I think that $5 a gallon gasoline at the start of the crisis was a massive, clarion wake-up call to many people. Those who couldn’t afford gas started looking at options and changed behavior – not because they wanted to, because they HAD to. Gasoline prices eased up, but by then the new behaviors were in place – and on top of that, employment and income haven’t exactly improved. Interestingly, there was a wave of older cars turned in during the first big government subsidy and then a second batch of purchases this past year when those who couldn’t afford a new car during the subsidy hand out (and so held on to the old one) saw the real end of the car’s useful life.

    I’d say there may well be a soft spot in the economy coming – some people I respect have been saying so. But between consumers permanently working to reduce their consumption (through changed habits or new, more efficient cars), improved technological efficiency in inventory and other delivery systems, and demographic factors, we probably actually will see a new, lower normal on gasoline consumption not unlike the new GDP trendline being parallel to, and lower than, the old one.

    What I want to know is, what is happening in diesel delivery? To some degree, gas and diesel offset each other. If one is going up and the other down, demand may have shifted through increased public transport or whatever. If both are going down? You do have to wonder.

  26. MayorQuimby says:

    BEN BERNANKE

    His QE amounts to handing one party money which maintains illusory and excessive asset pricing relative to wages.

    Once you reach debt saturation – adding debt HURTS the economy instead of helping. The Fed is ultimately powerless to IMPROVE the economy (you can’t improve the real world with monetary policy).

    But the Fed sure can HURT it!

    And it IS. BIG TIME.

    Q4 delinquencies are up too btw.

  27. golfer1john says:

    Besides the obvious, fewer people working and taking vacations, and the secular trend toward fuel efficiency,

    1. Lots of empty houses in the more distant suburbs. Where did those people move to? Closer to work, I think.
    2. Expansion of the control group: http://dilbert.com/strips/comic/2011-08-14/

  28. efrltd says:

    Electricity production also is slipping, an even more pervasive measure. Electricity flows through most machines, etc used in our economy.

  29. rsadj says:

    I think this trend is true in all the OECD countries. Demographics could be a big part of the trend.

  30. Savage1701 says:

    Wally – Yes, good point. I see another poster touched on this. My point was not what you are correct about – bloated packages, but since UPS and FedEx have to have a minimum 1 pound rate so as not to illegally compete with ounce rates the USPS enjoys a monopoly on, I still wonder if it is not more efficient for fleet deliveries.

    Sort of like if a bus began a directional run with a full load of passengers, let’s say 50, or only 1. It still has to make the full run for only one person. Granted, if it is at capacity with a full load of passengers using multiple stops on the routs, it will burn some extra fuel starting and stopping, but it won’t burn 50x the fuel to drop 50 passengers at multiple destinations, who in turn won’t be burning fuel driving themselves (analogy being everyone, or many people, drive a bunch of cars to the mall to shop, and some come out with only a pair of earrings or a trinket that fits in a tiny envelope).

    One other possible factor in decreased gasoline consumption is growth of internet to make electronic transfers. I don’t even have to drive to the post office, let alone banks, utilities, department stores, etc. to pay my bills. I just do them online. We can also do far more digital signing online, and a 44-cent stamp is way cheaper than driving a car much further than a mile or so.

    I’d still be interested if that mileage could be broken down into discretionary driving (vacation trip, Sunday afternoons) vs. necessary (getting to work). I’m wondering if some of it is just plain structural and how much of it is choosing not to visit a relative when it costs $28 in gas to do it.

  31. AlexM says:

    We used to be three car family with four drivers; now we are down to two cars and one with 150k will not be replaced. With working from home there is no need for two cars and if we need a second car for a short period we will rent one.

  32. [...] What is going on with miles driven and gas consumption?  (Big Picture) [...]

  33. Nuggz says:

    Speaking of gas tax, transit, and gas consumption.

    http://www.salon.com/2012/02/13/the_tea_partys_war_on_mass_transit/singleton/

    That’s it! I am done with giving these choads the benefit of doubt.

    The GOP is a shitstorm of losers.

  34. AlexM says:

    Our miles traveled have also gone down proportionately and most people I know are still in the gas saving mode due to financial circumstance or pain from higher gas prices. More walking, biking, smaller cars, and the giant RV’s seem to have almost disappeared from the roads. There are a few here and there and the giant pickups also seem to be fewer. Permanent change in our awareness and economy and long term indebtedness. People still feel poor as their home prices are still declining even if they are employed, the lack of wealth effect is real.

  35. JimRino says:

    Today I buy Kindle Books from Amazon, they ship electronically for free, no UPS delivery.
    I also buy Audible books which also ship free.
    I buy Music on iTunes, with no CD distribution cost, and no shipping cost.

    If I buy Shoes from Amazon, I don’t drive to the mall, I don’t waste any time browsing in the mall, I don’t spend any discretionary money. UPS delivers, but my incremental package delivery distance is a question of incremental blocks added to the UPS route, vs. Miles Driven to a Mall.

  36. [...] charts are from James Bianco’s post over at The Big Picture.  They clearly show that gasoline consumption is falling at an ever faster rate.  This is yet [...]

  37. JimRino says:

    But, in truth the biggest contributor must be an 8.2% unemployment rate.
    Plus, the U6 “long-term” unemployment rate of 15%.

  38. lalaland says:

    Recent college grads who previously bought cars and houses in the burbs are now either back in college and walking to class rather than commuting or renting in NYC and San Fran and riding mass transit or bicycles.

    Combine that with Boomers starting to retire (imho the most likely to drive, especially SUV’s), a shift by the working poor to mass transit, staycations, etc. and I think you’ve got it covered.

    Also the foreclosure crisis hit the exurbs – the farthest, most driver-oriented housing built the hardest.

  39. Savage1701 says:

    Having briefly worked for a Mobil gas/retail chain of about 50 locations at the time, I can agree with what that correspondent reported – the company I worked at got its gas at a terminal with a fleet of tankers and those people knew, almost to the hour, when the stations would run out and how to maximize their efficiency in delivery, since the drivers wanted to max their hours right up to the DOT logbook limits, rest the absolute legal minimum, and be on the run again.

    Our franchiser did not store any gasoline anywhere, other than what was in the underground tanks at each station, and they did not want to fill those stations until they could bring them a full tanker load. No way did they want to drive a 10,000 gallon tanker to a station to fill it with 1,000 gallons of a single blend of fuel, and they wanted each station to have the exact ratio of storage for each blend so it ran out in the most efficient way to refill it.

  40. capt dave says:

    Well, as far as my driving habits, I now look at the (roughly) $6.00 in gas to drive to the big box store for a few items and I decide to go to my local food/hardware/drug store and pay the higher prices. The local stores are so close that I often ride my bicycle. I also find myself planning ahead and using Amazon for more of my purchases, including vitamins, special sauces, tools, sporting goods, etc. The expense of driving to multiple stores and not finding the item you are looking for is becoming prohibitive.

  41. MikeG says:

    Anecdotally, I notice with my young cousins reaching driving age that they don’t care that much about cars and driving — some haven’t even bothered to get a license. So much of teenage socialization has moved to the internet now that you don’t need a car as much for a social life, only for utilitarian tasks. Plus, draconian fines and the proliferation of laws combined with identikit bland vehicles has made driving a sad chore; there’s not much joy in it anymore.

  42. 4whatitsworth says:

    The price of gas has been over $3 for quite a while now and internet technologies allow shopping and meetings without using your car. What does it mean? My guess is that the current massive profits in the oil and gas biz will take a hit once supply starts to build.

  43. It’s Not Just Gasoline Consumption That’s Tanking, It’s All Energy

    Not only has electrical consumption never recovered the levels of mid-2008, it peaked in mid-2011 and has begun a sharp decline in late 2011… Clearly, electrical consumption is in a downtrend with no recent historical precedent. Those claiming that U.S. growth is sustainable and the Dow is heading for 15,000 must square their rosy projections with sharply declining energy consumption. The two simply don’t match up…

  44. rob says:

    @ Mark E Hoffer : Dead on the Mark, mark. KLX250 but I have a fresh big bore kit sitting on the shelf that will bump it up to 365. Got a feeling my mileage may suffer, but the smilage will definitely increase.

  45. VennData says:

    Of course, these data are trusted, completely.

    There is no question that this data is an accurate portrait of everything that is America. Any other information that even hints that this etched-in-stone – posted on “The Internet,” …ney, Zero Hedge! – these tablets from Mount Sinai are the Lord’s Word.

    Sell! The First Commandment is Sell! You shall know that even if you lose your frankincense and myrrh – even covet thy Neighbor’s Gold, or take false idols, Lords (especially of the Lord Keynesian kind) – Ye shall know under that… THIS! …this is the word of GOD!!!

    …THAT WILL MAKE THOSE SECULAR SOOTHSAYERS SHORT!

    …HEEL THE HEDONIC-READJUSTING HEDONISTS HOLDS!

    …FORCE THOSE BLATHERING BELTWAYER-BUYERS TO BAIL!

    and so it is written.

  46. Lookout Ranch says:

    This perplexes me, too. Interesting stuff.

    A couple of observations:

    The freeway on my daily commute has been fairly crowded compared to a couple of years ago, so it doesn’t feel like fewer people are traveling to work.

    My weekend recreation driving to some of the remoter parts of my state have found the roads and small towns a lot quieter than usual, suggesting that more people are staying closer to home. A number of tourism-related businesses that held on through 2009 and 2010 seem to have thrown in the towel recently.

    In my own family, a generational change is evident. My kids’ formative years were a lot less car-centric than mine, and their recreational interests and hobbies are more urban and indoors than mine were at that age (and still are), so they drive very little and seldom go far. They could easily share a car or, in one case, almost do without. They just don’t care about car ownership they way my generation did/does.

  47. CSF says:

    We’ve looked at miles driven and fleet efficiency, but what about driving habits? My hypothesis is that people drive slower than 5 years ago, and this contributes to the decline in fuel consumption (in addition to the fewer miles driven and more efficient cars).

    Skeptical? High youth unemployment and a lack of household formation mean that the 16-25 year group is less likely to have access to a car. I bet this group drives the fastest. Remove them from the driving population and you get a smaller, slower driving fleet. Meanwhile, for those still on the road, it may be that economic uncertainty and high fuel prices have persisted long enough that people are finally changing their driving habits instead of hoping for higher wages or cheaper fuel.

  48. constantnormal says:

    I’ve been assuming (silly me) that individuals accounted for most of the gasoline consumption … however, this chart:

    http://advisorperspectives.com/dshort/updates/Pulse-of-Commerce-Index.php

    … an economic activity metric based on diesel fuel consumption, shows a similar situation … and diesel fuel is NOT directly consumed by individuals, at least not in any significant measure. So maybe my assumption was wrong.

    It’s always good to be reminded that the stock market is widely separated from the economy these days, and not to be surprised by a wide variance between economic indicators and stock market indicators …

  49. romerjt says:

    Nobody here must have read this . . . By JONATHAN FAHEY The Associated Press
    12/20/2010 . . . . “NEW YORK — The world’s biggest gas-guzzling nation has limits after all.
    After seven decades of mostly uninterrupted growth, U.S. gasoline demand is at the start of a long-term decline. By 2030, Americans will burn at least 20 percent less gasoline than today, experts say, even as millions of more cars clog the roads.

    The country’s thirst for gasoline is shrinking as cars and trucks become more fuel-efficient, the government mandates the use of more ethanol and people drive less.

    “A combination of demographic change and policy change means the heady days of gasoline growing in the U.S. are over,” says Daniel Yergin, chairman of IHS Cambridge Energy Research Associates and author of a Pulitzer Prize-winning history of the oil industry.

    What is the net gain in MPG for every car taken off the road vs every new car?

  50. lalaland says:

    Haven’t oil inventories been higher than estimated the last two months and it’s only Iran’s war games keeping it above, say, $95/bl?

  51. romerjt says:

    An another thing . . . wait until the “markets” actually discover and believe this, the price of oil, with a price well above cost of production and “excess profits” will drop like a rock.

    This conservation effect is happening everywhere and will grow because it’s good business. Remember IBM missed the personal computer . . its sort of like that.

  52. murrayv says:

    Two things: The Boomers have just passed their peak spending years and the Gen X generation, a much smaller cohort has entered theirs. Also Boomers have started the process of downsizing. That demographic shift alone could account for most of the decline.
    In addition, vacationers stayed closer to home the last few years. Motel/hotel vacancies are up. People are spending less as they work off the debt overhang.
    These two factors are supported by a considerable increase in fleet mpg of at least 20% since 1998.

  53. romerjt says:

    Lastly, in answer to my own question, a 2012 Camry and Chevy Malibu get about 20%-25% better MPG than the 2000 counter parts. Its gonna add up.

  54. tdotz says:

    Internet: Telecommuting. Once we got broadband here at la casa in the Rockies, my commute went from 15 miles each way to thirty five feet (your mileage may vary). Most of my vendors work at home now, too.

    In Denver some employers are actually requiring employees to work at home at least one day a week so that when one of our inevitable “snow days” occurs productivity doesn’t suffer.

    Suppose that’s maybe … 5% of the population?

  55. Livermore Shimervore says:

    I’m most interested to see if unemployment continues to drop and new jobs continue their consecutive months of gains while gas continues to climb. If we do, then this recovery is bigger than people realize.
    Just imagine would it would be if could get less of the average pay check going towards gas and loan/credit card interest and more towards actual consumption of goods and services for their local economies. Demand would surge.

  56. AHodge says:

    great data mining verrry interestin
    not much of an economy read i think
    could be big for the crack spread, and price from that angle–down?
    dealers can run off inventory, if its low now it could have been high earlier?
    they will stock up on a price view, then run off stocks on a less bullish view, they not always hand to mouth
    this is almost too big a move to be all final use?
    tried to short the UGA a while ago its been steadily slowly rising last month
    maybe look again next time i want risk off trades?

  57. Stan Klein says:

    Lots of factors. People buying better gas mileage cars (including hybrids), older lower gas mileage cars going out of the fleet (the turnover rate is about 5% per year), electric vehicles beginning to penetrate, the overall economic situation, more telecommuting, lifestyle changes, vehicles switching from diesel to natural gas and gasoline to diesel, greater use of alternative fuels/multifuel vehicles (e.g., more cars able to use ethanol in increasing amounts), plus any different ones mentioned by others.

  58. WFTA says:

    Maybe they are not counting the ethanol. I’ll go out on a limb and declare that in Houston, Texas, U S of A, we are not using any less fuel.

  59. crankitto11 says:

    What I find interesting about this chart is that in late 2007 and 2008, gasoline supplied was actually way above the miles driven trend line– as it should have been, with the recession having started in late 2007.

    Q: So why did gasoline soar to $4 per gallon in the summer of 2008 with demand way below trend?

    A: The “invisible hand”– of the oil companies and commodities traders picking the public’s pocket.

    Drill, baby, drill!

  60. Sechel says:

    Gasoline is not cheap, and the labor participation rate is down, so the conclusion is that less people are driving to work or driving for leisure.

  61. ironman says:

    Picking up on what some have suggested – the reduction in gasoline/distillate fuel consumption is not being driven by people buying higher mileage vehicles, which at best, account for . Nor does increasing ethanol substitution for gasoline account for the change (today, around 17 billion gallons of gasoline are supplied each month, along with with 1.16 billion gallons of ethanol, an all time high thanks to the federal mandate).

    Together, improvements in vehicle fuel economy (3%) and increased ethanol substitution for gasoline (7%) add up to 10%, less than 1/3 of the apparent increase in American fuel economy from 1988 to 2010, which appears to have increased by 35% over that time, with a big change taking place since 2007.

    Something/someone else is not burning as much gas/distillate fuel. The question is who?…

  62. crankitto11 says:

    Deja vu all over again:

    >>Strangely, the current run-up in prices comes despite sinking demand in the U.S. “Petrol demand is as low as it’s been since April 1997,” says Tom Kloza, chief oil analyst for the Oil Price Information Service. “People are properly puzzled by the fact that we’re using less gas than we have in years, yet we’re paying more.”

    Kloza believes much of the increase is due to speculative money that’s flowed into gasoline futures contracts since the beginning of the year, mostly from hedge funds and large money managers. “We’ve seen about $11 billion of speculative money come in on the long side of gas futures,” he says. “Each of the last three weeks we’ve seen a record net long position being taken.”<<

    http://www.businessweek.com/finance/rising-gas-prices-not-demand-driven-02142012.html

  63. Moopheus says:

    Since moving closer to work a couple of years ago, our car is relegated to weekend use only. Commuting and shopping are now done mostly by bike and walking. I put twice as many miles on my bike as my car these days. And while the percentage of transpo cyclists in the US is still relatively small (relative to other countries), it is increasing.

  64. hammerandtong2001 says:

    To add to some of the many good comments here…

    A few have noted the decline of driving among US teens and young adults. This trend is quite true. For young Americans, “owning” a car, or having access to one does not carry the same importance and zeitgeist it represented for generations of older Americans. In my over-priced Westchester Co, NY neighborhood, the majority of highschool seniors do not drive, and do not have drivers’ licenses. And I have heard the following remark: teens in metro area suburbs view cars as if they were refrigerators: functional items, and if mom can do the driving, that’s fine.

    Some stats associated with this trend: http://adage.com/article/digital/digital-revolution-driving-decline-u-s-car-culture/144155/

    .

  65. Been Around 1963 says:

    Three, big things:
    Teenagers do not go on dates like they did when I was in high school. They hang out in groups.

    Also, when I was in high school, not too many years after American Graffiti, driving aimlessly was viewed as fun. Now kids websurf and text aimlessly.

    Finally for people in business, if it looks like you’re going to spend too much time stuck in traffic, you teleconference a meeting if at all possible.

  66. phisqb says:

    A few things:
    1. The # of hybrids and other high gas mileage cars on the road is certainly increasing and reducing consumption.
    2. If I am traveling, why would I drive to LA from SF when I can fly for cheaper, less wear and tear on my car, and far less time (reduced miles traveled).
    3. If I am struggling financially, why would I take a driving vacation at all if I don’t have much money and gas is expensive (reduced miles traveled)?
    4. Just because someone has a job doesn’t mean they are driving every day…working from home is far more acceptable in the past not to mention public transport, rideshare and options like zipcar, city car share in some places. Remote meeting tools are abundant and relatively cheap compared to what they used to be, as well.
    5. More people starting their own home businesses = more people working from home as well.

    You can certainly tell the economy is picking up in the Bay Area as 280 traffic is now getting bad…as opposed to the 101 which just always sucks.

  67. bocon007 says:

    A few observations of my own:

    1. How many of us ten years ago would just jump in the car and “take a drive” when there wasn’t much else to do on a Saturday or Sunday afternoon? Go downtown. Take in a movie. Head to the countryside for a day.

    2. Although the the employment picture is improving, I imagine many of the new jobs are closer to home. Incomes are still fairly static. What’s the gain in commuting 25 or 30 miles each way if not for higher pay?

    3. Shopping as a recreational activity is largely a thing of the past. I realize this isn’t true for everyone, but in most areas of the country, discretionary spending needs to be redefined in these different times.

    4. More people are now satisfied with driving home after work and enjoying a home-cooked meal with family, especially for those people who are underemployed or for those whose wages are essentially the same as in 1994.

    5. Smaller cars. Teens sticking closer to home. Everyone obsessed with sitting on their asses at night, playing Angry Birds, streaming porn, Facebooking, watching the tube.

  68. SecondLook says:

    Some hard data for you all:

    Average number of miles driven by urban households:

    1990: 19,000
    2001: 19,300
    2009: 17,600

    Offsetting that somewhat, is the increase in total number of households during the past decade. Still, the data does suggest that, on average, we are simply driving less – confirming the above observations about changes in driving habits in the US.

    I’d like to add a comment about the notion that since we are using less, the price of oil should have come down; that it is being kept up by all those speculators. That idea completely overlooks the reality that oil is a global commodity, and while demand has dropped in North America and Western Europe, it has more than proportionally grown elsewhere – primarily in China and India. In fact, if the current rate of demand by those two countries continues as it has, by 2030 all the available oil for export will be needed by them – that is, all of the oil that can be sold by the oil exporting nations. At that point, the price of oil will be absolutely determined by the highest bidder, not as a short/intermediate set price as it is more or less now.

  69. donna says:

    I’m with CSF. If kids don’t have jobs, they don’t need/want/have cars to drive. And when they DO buy a car, it’s going to be small and fuel efficient or electric. We boomers are driving smaller cars these days, too. My boys got their licenses at 18 and 19. Younger son’s girlfriend just got hers at 21. I just downsized from a van to a fuel efficient smaller car.

  70. minesweeper says:

    I agree that decreasing labor force participation is accounting for a large portion of the consumption drop. But sustained high gas prices are probably finally changing behavior (particularly among younger workers) as people grudgingly buy more fuel efficient cars, move closer to work, take public transit, work from home, and vacation closer to home.

    One interesting thing to note is that California, which consistently has higher gas prices than the rest of the nation, has had flat to declining gasoline consumption over the past decade, despite an increasing population. California has added 1.8 million new drivers, or 8.3%, since 2002. However, consumption was down 3.5% over the same time period.

    California added 240,000 jobs in 2011, yet consumption is on pace to decline about 1-2% from 2010.

    http://articles.latimes.com/2011/oct/01/business/la-fi-california-gas-20111002
    http://www.boe.ca.gov/sptaxprog/reports/MVF_10_Year_Report.pdf

  71. MidlifeNocrisis says:

    I retired in December and don’t drive near as much. The one child still at home and in High School spends lots of time on Facebook or skyping. I was out roaming the world in my Firebird at that age……….

  72. SecondLook says:

    I want to add one interesting piece of data:

    According to the latest study by DOT, about 80% of Americans drive alone to work. The remainder, in order of use is: car-pooling, public transit, walking/bicycling to work, business at home, and finally telecommuting.

    Those numbers have been about the same for some years, despite the dramatic rise in gas prices. That strongly suggests that while we may be unhappy about fuel costs, they haven’t reached the tipping point where large numbers look for driving alternatives.

    The increase, if moderate, in average fuel efficiency has no doubt tempered the pain at the pump, but I suspect it would take a much greater price to make many Americans change their drive alone habit.

    (My personal guesstimate, based on percentage of average household income, is that we would have to see gas a bit above $5 before people will change)

  73. craig.r.jackson says:

    I find commute traffic is slightly down, despite falling unemployment. Other than that, I find myself in amazing agreement with many of the posters above:
    1) spouse works from home
    2) kids not interested in cars
    3) consolidated trips to the store
    4) better gas mileage
    5) use less electricity and natural gas in the home
    6) buy a lot more online
    7) I’m retired

  74. MotownMichael says:

    I’d say a huge driver in this is logistics has radically changed since 2008: a lot of trucks are now moved inter-modal by rail, which railroad volume levels are now dramatically increasing, railroads themselves have new software algorithms developed for more efficient routing and traffic planning, that saves millions on each RR per year. Manufacturing: one little noticed factoid about the GM and Chrysler restructuring was the plants that were closed, were usually far-flung locations from Detroit:Delaware, NJ, Oklahoma, Virginia, Minnesota, St Louis, etc. The plants that are running at high capacity, are much closer networked in the Midwest, or south-east. This took millions of trucks off the road annually, and saved millions in shipping cost. Combine this with much more fuel efficient trucks, cars, locomotives ships and people not commuting as much, and there is a huge drop in fuel consumption. In short what happened: $4 a gallon gasoline in 2008 caused a lot of things to change.

  75. moconn says:

    Although the recent plunge in product supplied to the market might seem alarming it is mainly being driven by refinery turnarounds, which typically take place during this time of year. Also, MasterCard Advisors’ US retail gas demand showed a 0.4% increase in gasoline demand for the week ending January 27th.

  76. CheeseburgerBob says:

    No doubt a rhetorical question?

    American (and the world’s) working class (which, however you classify them or by what percentage) are broke and can not sustain or the level of spending. Regardless of the nice economic indicators and statistics, the reason for the OWS, Arab Spring and other unrest, is not just because poor people don’t have anything to do with their free time.

    I would suggest that in the travels of economics writers and “market commentators”, a few side trips to local diners, college lunch rooms, and other real world encounters might shed light on the obvious.

  77. mdradar says:

    This data is cherry-picked. If you look at a longer-term version of the series, you can see that it is not uncommon to have seasonal lows:
    http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wgfupus2&f=4
    The contributor chose to show a part of the series that did not contain these lows.

    If you look at alternative measures of gasoline usage, there is nothing to be alarmed about. For example, monthly product supplied of motor gasoline:
    http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS1&f=M
    Or, how about monthly gasoline all sales/deliveries:
    http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=C120000001&f=M
    So, the data, taken as a whole, actually suggest nothing other than the possible recent development of a long-term trend toward less gasoline consumption. No “falling off a cliff.”

    ~~~

    BR: Wow, you are way off. You are looking at 60 year chart, and a 25 year chart — neither will provide any insight into recent drops in prices.

    Try this: The 4-Week Avg U.S. Product Supplied of Finished Motor Gasoline (Thousand Barrels per Day)

  78. mdradar says:

    I’m sorry if my post was unclear, but that was sort of my point. Depending on how you present the data, you can make things look alarmist. I should also acknowledge that Mr. Bianco is more cautious than I initially gave credit for – I was perhaps responding as much to the Zero Hedge post he refers to, which is quite alarmist in tone.
    As comparison, take a look at the chart of consumption in this most recent report from the EIA:
    http://www.eia.gov/forecasts/steo/report/us_oil.cfm
    I won’t pretend to know how these data are arrived at or really what any of the data actually means, but the chart on that page certainly doesn’t show any recent precipitous decline in gasoline consumption.
    Here’s a chart that shows a yoy downward trend in gasoline consumption starting at least since March of last year.
    http://www.eia.gov/oog/info/twip/twip_gasoline.html#demand
    What does that data mean? If the downward trend started last year, and gasoline consumption predicts a recession, why aren’t we in a recession right now?

    ~~~

    BR: That was MY point — a half century chart does not/cannot show daily changes over a few weeks or months.

    You have to bring an integrity to the process. You can present things honestly and even handed or not — Bianco did, and unfiortunately, you did not.

  79. mdradar says:

    All right, all right. Duly chastised.

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