Forget the need for a U.S. carbon tax – the economy has put a big dent in gasoline use and driving

UPDATED: see below

A few days ago I did a report on the U.S. Energy Information Administration (EIA) numbers for carbon dioxide emissions, showing that it was clearly down, and back to levels not seen since 1994, and noting that since Kyoto in 1997, U.S. emissions have dropped even though Kyoto was never ratified in the USA.

kyoto_met_1997-2012

If you thought that was troubling and strange have a look at these numbers which also indicate the state of the U.S. Economy. First, the number of miles driven monthly for the last 30 years. As you can see, just like global temperature has flatlined, so has the number of miles driven.

US_miles

Source data: http://research.stlouisfed.org/fred2/series/M12MTVUSM227NFWA

Now the amount of gasoline sold. Note the regular seasonal “heartbeat” pattern up to about 2008, then that pattern gives way to a precipitous drop at the end.

US_gasoline_sales

Source data: http://www.eia.gov/dnav/pet/hist_xls/A103600001m.xls

If that doesn’t paint a grim picture of the U.S. economy, I don’t know what will.

Zerohedge writes:

…but the biggest question we have is just how did the biggest boost in energy and engine efficiency occurred at two key junctions: Just after the Lehman Failure, and just after the US downgrade and the first debt ceiling crisis, when the total sales of gasoline by US retailers literally went off the charts, and which data series is now languishing at levels not seen since the 1970s (unfortunately we can only estimate: not even the EIA’s data set goes back that far).

Perhaps, just perhaps, Occam’s razor applies in this situation as well, and the collapse in energy demand in the US has little to do with MPG efficiency, higher productivity, and throughput mysteriously achieved just when the entire economy was imploding in the months after the Lehman failure, and despite the re-emerging proliferation of cheap Fed debt funded SUVs and small trucks, and everything to do with the US consumer being slowly but surely tapped out?

US_gasoline_sales_econ

Of course, if that is the case, than the US economy is far, far weaker than even we could have surmised, although it certainly would explain the desperation with which the Fed is doing everything in its power to preserve the levitation of the S&P, i.e., the confidence that all is well despite all signs to the contrary. Because should the market finally be allowed to reflect the underlying economy – not the administration represented economy, but the real one – then everything that has transpired in the past five years will be child’s play compared to what’s coming.

I wonder if that brilliant economist of the NYT, Paul Krugman, can pull the wool out of his eyes long enough to comprehend this?

h/t to Kate at Small Dead Animals for getting me interested in this enough to plot the data myself to see if it was true.

UPDATE: I added this is response to comments about the number of miles not dropping as fast. “jeez” points out that miles driven are an estimate from surveys.

If people are driving less miles, we have less consumption, and that would mean excess supply and lower prices. Lower prices should then result in more people driving more, sort of a self correcting feedback.

Instead what we have is a 50% drop in retail sales of gasoline during a period of reduced driving.

That says to me that many people have just stopped buying gas. Consider that 90 million people are now out of the workforce. Look at this graph and that helps explain part of what we are seeing.

UPDATE: Correction. From this comment, I agree, the Zerohedge article focus on retail sales is misleading, see new plot I did below. I’m not privy to the vagaries of gasoline supply/sales channels, and had I been, this would have raised more suspicions. Thanks to WUWT readers for the peer review!  – Anthony

Chad says:

Anthony,

As a few others have mentioned, the bug is in “retail sales by refiners.” There has of course been wholesale in the past to off-brand distributers (i.e. 7-11 selling gasoline that they sure don’t refine) compared to Exxon selling Exxon refined gasoline. At those drop-off points what likely happened is that fewer people were willing to spend a few extra pennies stopping at Exxon, and now buy their gas at Wal-Mart or Kroger when they do their grocery shopping.

The fact that

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS1&f=M

http://www.eia.gov/totalenergy/data/monthly/pdf/sec7_5.pdf

both align with the CO2 and other data (like total petroleum consumption) makes it much more reasonable to think there has been a ~10% decline in gasoline purchases than a 50% decline. Otherwise we would have to ask how we cut 25% of our Carbon use (petroleum is ~1/2 of our carbon use, and a 50% decline in that would be a total of 25% of all carbon) while only decreasing carbon emissions by ~10%.

(Note: To test this I plotted the EIA data below from here: http://www.eia.gov/dnav/pet/hist_xls/MGFUPUS1m.xls   – Anthony)

US_gasoline_BBL_1993-2013

A 10% decline would then be appropriately explained by 4% decline in labor, increases in fuel efficiency, and smaller factors like online shopping (remember, somebody still drives it to your house – and usually they leave a large truck idiling while they walk the package up and have you sign). A 10% drop is still a huge amount of gas, but it is not the same as a total societal collapse that a 50% drop in 4 years would indicate.

I assume this was probably an honest mistake, but since it has been pointed out several times I think the most honest thing to do is change the data set and correct the article.

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Jason Bair

A very real hockey stick

DJ

Is there a Private Sector is Doing Just Fine graph?

MDR

Something seems funny here, at least to me. I would have assumed that the number of miles driven and the number of gallons of gasoline sold would be proportional, save for an adjustment that reflects the long-term improvement in average fuel economy over time. But these plots seem do not bear that out. Since 2008, the number of miles driven has interrupted its upward trend and flatlined, while the amount of gasoline sold has decreased by a factor of 2. What am I missing?

Dr K.A. Rodgers
Chris

How are we driving in miles at approx 2004 levels but buying half the gas? Something doesn’t look right.

The number of miles driven might have dropped because more business is done online.
My business partners and clients, I hardly speak to them anymore – when I’m not typing into skype or phoning them, emailing them, directing them to look at web presentations I’ve prepared, I’m usually asking them to download something.
With all the new productivity tools which have arisen over the last decade, you barely have to get out of bed in the morning to have your business at your fingertips – in fact, on days when I sleep with my phone under my pillow, so I can take support calls, I don’t.

bones

Better check your hole cards on that retail sales chart. I question the drop in 2012.

I think you need to look at this http://www.eia.gov/dnav/pet/xls/PET_CONS_PSUP_DC_NUS_MBBL_M.xls which includes all finished gasoline sold. I am not sure, but I think your chart leaves out the reformulated gasoline.

MP

1) I really dislike graphs that aren’t based at 0.
2) @MDR the collapse of trucking and SUVs? That would bring down gallons faster than miles driven. Though looking at the data it’s “retail” gas, not wholesale, so I suspect the sample isn’t quite the same. The zerohedge post goes more into detail.

Werner Brozek

MDR says:
April 9, 2013 at 9:35 pm
But these plots seem do not bear that out. Since 2008, the number of miles driven has interrupted its upward trend and flatlined, while the amount of gasoline sold has decreased by a factor of 2. What am I missing?
This is just an educated guess on my part. But could it be that places like Los Angeles has fewer cars on the road so less time is spent in traffic jams and more of the gasoline is actually used to drive instead of idling?

old construction worker

CO2 tax is not the Tax per say, it’s about control. Picking winners and losers and rent seekers.

MDR
One quantity is easy to measure. Fuel producers KNOW how much gasoline they sell.
Miles driven can only be vaguely estimated from surveys (until every vehicle is tracked-coming soon.)

Looking at the other comments, I do think something is wrong here also.

jc

I have to agree with jeez above. Miles traveled/retail sales cannot be reconciled.
This is staggering. Halving retail sales goes way beyond economic issues.
It says societal collapse.

Dr K.A. Rodgers

Just talked to a statesider. He asks:
1. Do the numbers measure pure gasoline or do they include gasoline cut with ethanol?
2. Do the trends take into consideration the increased use of natural gas?
3. To what extent are the fuel efficiencies mandated by state laws such as California taken into consideration?

rk

It looks like reformulated is included in these numbers
http://www.eia.gov/dnav/pet/pet_cons_refmg_d_nus_VTR_mgalpd_m.htm
Each of the tabs on this link show different cuts of the data, refiner owned, wholesale sales, etc. In Jan 2013 looks like they sold 27 Million gals….the lowest monthly since…well, this chart only goes back to 1983
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=a103600001&f=m
boy, i bet they are *really* happy they realigned into the chips and soda business.

Steve (Paris)

A lot more people running on empty

philincalifornia

Anthony, it maybe doesn’t change the shape of the curve much but, unless my reading glasses are letting me down, or there’s something I don’t understand about “sales by refiners”, the y-axis numbers are off by a factor of 10. Total annual US consumption topped out at 140 Billion gallons in 2007, so a daily average would be 1/365 of that, or around 10X of the y-axis numbers.
http://www.eia.gov/tools/faqs/faq.cfm?id=23&t=10

rk

http://www.eia.gov/dnav/pet/TblDefs/pet_cons_refmg_tbldef2.asp
and, also, here”s the definitions they use so you can see exactly what is included.

BioBob

@ JC, correct. The US economy is collapsing in slow motion. Why else would we see 40% of the normally working population NOT WORKING. Get a clue – record levels of US sovereign debt (17 trillion), record levels of people on food stamps, record levels of people taking early social security, record levels of people on disability, record levels of people at poverty levels, record levels of homes foreclosed, record low levels of home sales and new home construction…the list goes on and we are just waiting for the other shoe to drop.
The second the Fed stops pumping money or the interest rates start rising the fat lady will be taking a deep breath. If something can not continue to go on — it won’t.

philincalifornia

PS to my above post:
Maybe refineries are a fraction when also adding in:
“blending plants, pipelines, and bulk terminals.”

J Barber

But overall US retail sales have increased by 9.58% over the last two years: http://ycharts.com/indicators/retail_sales/chart#series=type%3Aindicator%2Cid%3Aretail_sales%2Ccalc%3A&format=indexed&recessions=false&zoom=5&startDate=&endDate= . Could it be that people no longer drive to Walmart because they order what they want on line and wait for it to be delivered?

J Barber says:
April 9, 2013 at 10:58 pm
But overall US retail sales have increased by 9.58% over the last two years: http://ycharts.com/indicators/retail_sales/chart#series=type%3Aindicator%2Cid%3Aretail_sales%2Ccalc%3A&format=indexed&recessions=false&zoom=5&startDate=&endDate= . Could it be that people no longer drive to Walmart because they order what they want on line and wait for it to be delivered?
*************************************************************************************************
Or the figures are fudged???

David L.

I don’t believe there are less miles driven in my area. I’m always astounded at the constant high level of traffic all day, every day. The roads are packed at all times, especially midafternoon during the week when a fraction of people are supposedly at work.
I live on a small side street that serves a community of a couple dozen homes. The road would not really be used as through traffic. And yet every day, all day (even just now and it’s 2:15am ! ) a car goes past on average every 3-5 minutes. Where is everybody going all the time? The same cars go up and down past the house all day , every day. It’s worst when the weather is nice and sunny. I’ve definitely noticed that temperature increase is correlated with a dramatic increase in traffic.

MDR

There is still something funny about the original two plots.
I still don’t know exactly what I am looking at, and consequently I think the analysis about the degree to which the labor market influences these numbers is premature.
As Chris [April 9, 2013 at 9:41 pm] stated succinctly: How are we driving in miles at approx 2004 levels but buying half the gas?
As philincalifornia [April 9, 2013 at 10:43 pm] stated: The y-axis numbers [in the “total sales by refineries” plot] are off by a factor of 10.
My take on Chris: Fuel efficiency hasn’t improved that much in 9 years, and the amount of transportation fueled by CNG or electric remains miniscule in comparison to gasoline powered vehicles and thus cannot not account for much of the 50% drop. It’s possible the survey of miles driven is at fault.
My take on phil: But that leaves the other plot, and total sales by refineries would seem to be easier to measure [and thus more accurately measured] than miles driven. However: Given that phil’s link states off the top that in 2011 the US consumed “a daily average of about 367.08 million gallons” of gasoline [side note: are 5 significant figures really necessary?], this does not match the daily numbers plotted in the post, as phil mentioned. Yes, I know the table says monthly, but that refers to the sampling [of once per month] and not to the consumption rate divisor [which is per day]. This is verified by the first link given by rk [April 9, 2013 at 10:38 pm], where the exact same data are provided in the “1983-2013” link in the “motor gasoline” row of the table, down to all of the wiggles, in which the units are clearly “thousand gallons per day”, i.e. same units as the plot in the original post. That, in turn, causes me to wonder whether the total refinery sales plot is measuring some subset of the total amount of gasoline used for transportation, since it’s so much lower than the aforementioned 367.08 million gallon figure, and thus we are not being provided with the complete picture. I can’t find any indication of what this is actually plotted on the various source webpages right now, though, so I’m at a loss, especially since “gasoline” is fairly specific and primarily used for transportation in the US [though it is also used in agriculture as well].
Bottom line: Something still seems funny here.

Michael Poteet

Total miles are down but seem to have stabilized; vehicle miles includes trucks and buses; they generally burn diesel. Do you have any historical usage curves for diesel? Any historical data on the split of total miles between diesel and gasoline? If the proportion of gasoline miles to diesel miles is basically unchanged and total miles is flat then it would seem reasonable to attribute declining gasoline sales/usage to improved overall gasoline engine performance.

Ed Zuiderwijk

What are the figures for sales of bicycles?
Just a thought.

Andor

We know its all a money making scam! One volcano, just one gives out more CO2 than whole of mankind’s existence?
Money-making scams:
Y2K virus………biggest BS ever and millions made out of it
CFC’s……..favours US export and companies
Ozone depletion………BS
AGW…….trillions made of it
CO2……..millions made if not trillions
Peak-Oil (fossil oil)…….crude price control all BS anybody heard of A-biotic oil? Must have been a lot of dinosaurs on Titan then…oceans of hydro-carbons!
And many more to come……………

From 1978 to the present I am sure the US population has grown so even though the workforce participation RATE has fallen from a peak of 67% to 63% now the actual NUMBER of people working has probably increased so the participation RATE cannot be taken as a proxy for petrol use.
REPLY:your “probably” argument doesn’t cut it here, show some data – Anthony

The statistics does not include all motor gasoline sold. You can find the total numbers here:
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS1&f=M
As you can see it is four times bigger than the retail sales by refineries
I have also done some basic math to check:
The retail sale from the first link (retail sales by refinereies) is 62 M Gal/day in 2000. The other link (Total supplied motor gasoline) is 220 M Gal/day
If you divide these numbers with the approximately 250 M cars in the US you get a more reasonable figure from the latter statistics.

Scarface

The greens are cheering though.
Deindustrialization is what they preach; depopulation is what they want. People should be alarmed by the lack of growth of the economy, yet they are alarmed by non-existing warming…

BioBob

@Steve B — or the currency has been inflated by over 25% and the 10% increase equals at least a 15% drop in actual sales volume. My own calcs have shown purchase price for a 2 year old low mileage car has risen over by 30% in 2 years. That is simply a function of the inflating currency. Do the math on the unit price of gas and see what you get !!
The Bernank is printing over a trillion a year, atm

Lawrie Ayres

I think Electricy consumption would tell you far more about the overall state of the nation. Lower consumption could reflect less manufacturing or reduced home energy use or combinations of the two. Your population has increasedover time so has electricity generation increased proportionately or has it lessened?

John Parsons

Anthony,
You say, “Consider that 90 million people are now out of the workforce.” The entire US workforce has never been over 156 million. How can that be?
While gasoline demand has plunged, during the same period US GDP has grown by 1.2 Trillion dollars. Up over 8%.
JP

ckb42

So now the question is why have refineries’ sales of gasoline gone down by half? I know a few big refiners went out of business recently so that would account for some, but half?? And who is picking up the slack? Is the US importing refined gasoline now?

Stephen Richards

Instead what we have is a 50% drop in retail sales of gasoline during a period of reduced driving
That says that oblarny has succeeded. These 2 together can mean only one thing, Price hike.

Tom J

Miles traveled is presented by the Federal Reserve Bank of St. Louis. The Federal Reserve has individual banks in different regions of the US, since different regions have differing economic outputs and will respond differently to the macro economy. The individual banks then report to the central Fed. The reporting of the mileage is only for that region. That should explain the difference.
Now guess where incomes have not stagnated but, instead gone up; where home values never declined with the collapse of the housing market and, in fact, are still appreciating; and, finally, where unemployment is about the lowest in the country by a significant margin. Washington and the surrounding metro area.
Hope & Change!

Anthony, forgive my failure to provide US population numbers. I thought my point about the RATE of workforce participation was self-evident!
The population of the USA rose from 225m in 1979 to 282m in 2000 and to 314m in 2012 according to data given here http://www.google.co.uk/publicdata/explore?ds=kf7tgg1uo9ude_&met_y=population&idim=country:US&dl=en&hl=en&q=population%20of%20usa
So, a drop in workforce participation from its peak of 67.3% in 2000 to 63.3% in 2012 STILL results in an actual INCREASE in the workforce from 189.79million to 198.76million
I repeat, you cannot use the reduction in the RATE of workforce participation as a proxy for the use of gasoline (or petrol as we call it in the UK). Sorry.

Tim Wilson

“If people are driving FEWER miles”…. not “LESS miles” 🙂

Streetcred

More importantly what is the trend in trucking miles ? The delivery of goods and materials is a strong indicator of economic health … if that is reducing then fewer goods are being delivered and less material being consumed … which means that private (retail) consumption is down and manufacturing is down … BAD BAD BAD !!!

Jakehig

Maybe that graph only tells part of the story as it only shows retail sales by refineries. So it does not include imported gasoline nor any blending (is it 10% ethanol now?).
Also what about diesel – has its use grown significantly? In the UK petrol (as we call it) sales are down markedly but diesel is up a bit.

petrolhead

The chart only shows gasoline. Could the explanation be as simple as that people who drive a lot of miles are now buying Diesel cars? this would show up as a decline in gasoline but there should be an uptick in diesel but not as big as diesel uses 5 liter per kilometer and gasoline consumes 7-10 liter per kilometer.

Streetcred

marchesarosa says: April 10, 2013 at 1:30 am
Anthony, forgive my failure to provide US population numbers. I thought my point about the RATE of workforce participation was self-evident!
The population of the USA rose from 225m in 1979 to 282m in 2000 and to 314m in 2012 according to data [ … ]
So, a drop in workforce participation from its peak of 67.3% in 2000 to 63.3% in 2012 STILL results in an actual INCREASE in the workforce from 189.79million to 198.76million
—————–
Population has increased by over 11% but participation has reduced by ~4% … the economy has failed to keep up with creating sufficient jobs for its increasing population. Employment will naturally grow with an increasing population but this is not a result of increased prosperity which fuels consumption. Essentially, net unemployment has increased and this is reflected in a drop in consumption of gasoline.

BioBob (April 9, 2013 at 10:45 pm) said: “The second the Fed stops pumping money or the interest rates start rising the fat lady will be taking a deep breath. If something can not continue to go on — it won’t.”
The Fed won’t stop. They are now printing money to give directly to politicians to spend. There is almost zero political will to stop the Fed, most people don’t have the faintest grasp of the seriousness of the situation. As long as the Fed prints we have no way to grow out of debt (personal and government) because investors cannot commit money for long terms to get big boosts in productivity. We are all speculators now even if we believe we are buying and holding. Companies speculate on our behalf using simple carry trades or more complex investment fads. Even China’s productivity growth is tapped out and our Fed mostly exports inflation to places like that. The bottom line is that a hollow economy has less need for gasoline to commute to better jobs because there are few better jobs.

Espen

Hmm. I thought the main “driver” for reduced CO2 emissions in the US was the shift from coal to (shale) gas?

H.R.

I’m trading my truck for a gas-sipper at the end of the month. I’ll be using about 40% less gasoline after the switch. Someone with the initials of Anthony Watts drives an electric car and is certainly not putting much coin in the pockets of big oil.
Anecdotal evidence, sure, but what percent of the drop in usage has nothing to do with the general economy and everything to do with people being tight with a buck? Hard to measure, I’m sure.

Leon Brozyna

Scary charts … looks like we’re becoming the land of the hungry and the home of the unemployed.

It is five times farther to drive to work every week
than it is to drive once a week to sign up for unemployment!
Alfred

johnmarshall

It is amazing what an increase in unemployment and lowering of living standard will do. Well done Obama!(?)
Time for change i think.

MattN

I really question the 50% reduction number. I just don’t see 50% fewer people on the road or at the gas station. I highly suspect that number. Also, 90million people out of work? Come on, that’s 1/4 of the US population. Unemployment is not at 25%…..