I came across this stunning stat recently that shows that gasoline consumption in the U.S. is falling like a rock. More like going off of a cliff. This chart was prepared by Steven Hayward of the American Enterprise Institute from data collected by the U.S. Energy Information Administration that tracks retail deliveries of gasoline to filling stations. Since this is what is being delivered to gas stations it represents what is being sold and consumed by the cars and trucks which travel our roadways.
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| Monthly U.S. Total Gasoline Retail Deliveries By Refiners |
(Note-this chart does not include a data point for December's 30.4 million gallons/day. The EIA released this data earlier this month after Hayward published this chart. January's number will be availalble in early April).
From the mid-1980's until mid-2007 gasoline retail deliveries stayed pretty much in a range of approximately 60 million gallons per day (+ or - 10%). In fact, from May, 1983 to June, 2009 there was not one month that gasoline deliveries were less than 50 million gallons per day. See the stats for each month at the EIA website.
Since July, 2009 there has not been one month where deliveries were more than 50 million gallons per day. For the first nine months of 2011 deliveries dropped to around 40 million gallons per day. However, in the last quarter of 2011, deliveries were averaging only 31 million gallons per day. In other words, in the last few months we have only been consuming about half of the gasoline we have been for most of the last 25 years!
The big question is what is going on?
Has this significant decrease been caused by rising gasoline prices that has caused people to drastically cut back on their driving? That must have some effect but we were still using 50 million gallons per day almost a year after the price shock that took prices over $4 per gallon in mid-2008. However, consumption continued dropping even though gas prices were falling in late 2008 and 2009. Prices dropped from $4.17/gallon in July, 2008 and were at $2.676 in December, 2009. During the same time retail sales of gasoline fell from 49.7 million gallons per day to 47.4 million. See EIA stats.
Has this been caused by increasing fuel efficiency in the fleet of cars and trucks on the road? This
also must be having some effect but the average vehicle in America has not suddenly starting getting double the miles per gallon over the last few years. We are not selling tha many Chevy Volts! Only 7,671 were sold in 2011.
Has this been caused by the emerging virtual economy with more people working and shopping from home? There are clearly more people telecommuting and shopping over the internet. However, it is unlikely this alone could have the dramatic effect we are seeing in this gasoline sales data.
Has this been caused by the poor economy and increased unemployment? There has been an historical correlation between reduced GDP and lower gasoline usage. You can see it above in the lower levels of gasoline usage in the early 1980's and 1990's recession and the period right after 9/11. The same is true for the reverse. The boom years of the late 1980's, the late 1990's and the mid-2000's recovery all caused retail gasoline sales to spike. The correlation does not seem to be as strong with employment.
Charles Hugh Smith looks at all of the possibilities in his blog article "Why Is Gasoline Consumption Tanking? He has significant concerns about what this could mean for the economy over the next few months.
That 27% drop in a few months in unprecedented, except in times of war or sharp economic contraction, i.e. recession.
If we stipulate that vehicles and fuel consumption are essential proxies for the U.S. economy, then we can expect a steep decline in economic activity to register in other metrics within the next few months.
Such a sharp drop would of course be "unexpected" given the positive employment data of the past few months. But as the data above shows, employment isn't tightly correlated to gasoline consumption: gasoline consumption reflects recession and growth.
In other words, look out below.
I must admit I don't know what is going on. What I do know is if you would have made a statement in June, 2007 (when daily retail sales were 60.9 million gallons) that by the end of 2011 we would be using only half that much gasoline in our cars and trucks there is not one person who would have believed you. This would not have even been considered realistic as a Tom Clancy plot line in one of his novels.
This is one stat we will need to keep our eye on.
Its got a lot to do with prices. Gas in not inelastic. If the price goes up, people will find ways to use less of it.
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