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.
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.
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.
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?
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
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)
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.
Streetcred informs us that
“the economy has failed to keep up with creating sufficient jobs for its increasing population”.
“Who knew”! The West has been in recession!
This still does not alter the fact that more people are economically active in the USA now than in 2000. The falling RATE of workforce participation in that period is not a proxy for gasoline use.
I drive 100 miles a day less since I have been telecommuting. Also, I have been driving to Boston for medical reasons and I have noticed that traffic is less bad than when I lived there 20 years ago.
I too am having problems reading this. Is it intentional that the 3rd and 4th graphs appear to be identical except that the 4th has the Lehman bank failure and the US credit downgrade marked?
Gasoline stock changes? No it appears to be kept at 200M barrels:
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WGTSTUS1&f=W
…more people are economically active in the USA now than in 2000. The falling RATE of workforce participation in that period is not a proxy for gasoline use…
In fact, the graph showing monthly mileage confirms a substantial overall increase from 2000 (when the rate of workforce participation began to fall) to 2012 and only a relatively small reduction in mileage since 2008.
There is indeed a lack of congruence between the various measures given in this thread.
The carbon tax means different things to different people. To the faithful, it means a way to penalize living, and to get rich. To the government bureaucrats (not to be confused with politicians) it is a way to increase revenue when the very term “tax” is an anathema to the populace.
So CO2 is down due to the continuing recession. But that means gas tax revenue is down as well. So states are coming up with some innovated ways to try to recoup the loss of revenue in order to feed their hungry bureaucrats.
In this state they have the “anti-” carbon tax. It is a fee assessed on all hybrid cars in order to pay for the roads they drive on.
So “need” is a subjective term. Governments “need” taxes, and the carbon tax is not dead, just hibernating. It will be repackaged, called something else and trotted out again as gas revenues continue to fall (due to CAFE standards among other things).
I don’t get this chart: “U.S. Product Supplied of Finished Gasoline” as it doesn’t match any of the other data online. Where is all that finished gas going (hard to believe that it is all in inventory)??:
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS1&f=M
Although the amounts of finished gasoline exported have increased dramatically (from ~3 million to ~16 million barrels monthly) this does not make up for the above ref.:
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFEXUS2&f=M
And imports of gasoline match the drop shown in article:
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wgtimus2&f=4
The 90 million out of work figure is out to lunch. Where does that number come from?
Pretty soon no one will be able to afford to drive like in North Korea.
Speaking of the economy…
See the changing US unemployment RATE here
http://www.google.co.uk/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&idim=country:US&fdim_y=seasonality:S&dl=en&hl=en&q=unemployment%20rate%20usa
This, too, only makes sense if it is standardised for the growing number in the potentially economically active age group over time.
“As part of the economic policy of Barack Obama, the United States Congress funded approximately $800 billion in spending and tax cuts via the February 2009 American Recovery and Reinvestment Act to stimulate the economy. Monthly job losses began slowing shortly thereafter. By March 2010, employment again began to rise. From March 2010 to September 2012, over 4.3 million jobs were added, with 24 consecutive months of employment increases from October 2010 to September 2012. As of September 2012, employment of 133.5 million remained 4.5 million below the pre-crisis peak in January 2008.[139]
http://en.wikipedia.org/wiki/Unemployment_in_the_United_States#Demographics
“While gasoline demand has plunged, during the same period US GDP has grown by 1.2 Trillion dollars. Up over 8%.”
GDP includes government spending so is not a reliable indicator of how an economy is actually doing. When the feds waste trillions on various bailouts and green energy schemes, this goes into GDP and looks like the economy is doing fine. But, if most of the money was wasted and only lined the pockets of a relatively few crony-capito-socialists, it really did little for the economy and the ordinary citizen, except perhaps raise their taxes at some point.
@ur momisugly John Parsons says: April 10, 2013 at 12:02 am
2 things to consider:
#1 – There have always been those out of the workforce. For one reason or another (retirement, raising children, unemployment). So the total workforce aged population continues to grow, but the workforce does not. That is how 90m are now out of the workforce. it does not mean 90m left yesterday, only that the number has grown disproportionately to the workforce participation in the last 5 years.
#2 – What is the GNP up? And of that 8% (which includes government spending which we know has increased by over $1t in that time period – via the stimulus alone), how much is inflation? Subtract the $1t from the $1.2t and that leaves? not much.
Random thoughts
I am a school teacher. We keep getting our budget cut yet our student population grows. That means less taxes are being collected relative to the population (population grows but the same amount of cash available per capita is not keeping up). Yes, we get more money each year, but we are spending less per student. Our retirement system isn’t nearly what it once was and is being cut again. Yes it gets more money each year but individually that system is slowly paying out less and less per person each year.
So somewhere in this population growth the entire world is experiencing and will continue to experience, there is less cash available for each person. Less cash coming in, less cash going out. If more people are working but each person is getting less and less cash each year for their work, the ability to go out and spend at previous levels is decreasing.
However, this begs the question: Were we over-indulging ourselves in the past when cash was available? And was the manufacturing community willing to feed our desires? A good life does not mean buying a new washer every 4 years. It means buying a good one that lasts 20 years. However, if we return to a time when such purchases lasted a long time, we would soon see a growing poverty stricken population.
It’s a conundrum for sure.
Maybe all the millions of federal workers around DC are now walking the 100 yards to the nearest lunchtime cafe instead of driving, or, gasp, packing lunches.
An anecdote; I drive 10 y.o. 50 mpg diesel VW TDI, ATM with two really nice bikes folded into the back (a BikeFriday NWT and my ICE Trike Sprint 26). On our way to bicycle in SC, escaping late snows in Wisconsin (an inch is forecast for today).
We are not in the job market. Simpleton economists say ‘a rising tide floats all boats.’ Our boats are aground, with an inflationary hole in their bottoms, the water is chest high and rising. Only a reduction in the cost of living benefits all.
dbstealey says:April 10, 2013 at 4:48 am
Although there is no metric, bartering is way up. The greater the obamanation, the greater the underground market. Not a good trend for a ‘tax-it-to-survivalist’.
Skyrocket has succeeded in killing the economy. Talk about hide the decline then claim victory. Then go further down the path.
“Early analysis: Obama’s 2014 budget numbers are based on bad math, phantom revenues, imagined spending cuts and a middle-class tax hike”
http://www.dailymail.co.uk/news/article-2306688/Obama-2014-budget-analysis-Numbers-based-imagined-spending-cuts-middle-class-tax-hike.html
Petrolhead: …diesel uses 5 liter per kilometer and gasoline consumes 7-10 liter per kilometer.
Man, what are you driving? That figures out to about 2 gallons per mile.
The retail sales report is only by refiners which do not reflect total gasoline sales. Most refiner sales are to wholesale markets with the share of direct sales to retail declining. This is not the report anyone uses to track gasoline demand in the U.S. Here is where the actual demand numbers are reported :
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS2&f=A
“the economy has failed to keep up with creating sufficient jobs for its increasing population.”
Maybe. Or maybe not. As population grows, there are more people to create wealth, such as by growing food, and more people seeking to consume stuff, such as food.
There is nowhere in economic theory, outside of Malthus, that a population can get too big to function.
It just doesn’t make sense. The only way that argument makes sense is if there are limited essential resources that are unavaiable, either by being tightly controlled (as the AGW crowd wants to do with global cap and trade), or the resource simply runs out – which is far-fetched at this point for just abt every good or service, since rarity of things such as lithium for batteries would drive alternatives to be favored.
A drop in workforce participation rate does NOT equal an increase in unemployment, or even necessarily a poor economy. I suspect that the current drop in participation rate is due to baby boomers retiring. This drops the participation rate, but does not increase unemployment.
In a poor economy, the participation rate may actually increase, as there would be fewer stay at home moms, and more students working rather than relying on parental support etc.
I would expect a good, expanding ecomomy may drop participation as these factors reverse, and there are more single income households.
Steve Keohane says: April 10, 2013 at 5:41 am “Although there is no metric, bartering is way up.”
Bitcoin BTC _virtual_currency_ value doubled within the last two weeks, from ~USD100 to ~USD200 yesterday. I am disappointed in myself for not understanding enough, being computer literate enough to be able to install a trustworthy BTC client and backup.
I agree the economy is in much worse shape than we are told, and that inflation is higher than reported. WIth such a drop in gasoline consumption, how can gas prices still be so high? Leverage… Easy money from the Fed keeps stocks and commodities bid high. Who wouldn’t speculate with free money if they could? Every time the Fed announces more QE, gas prices surge.
That being said, I will order something off of Amazon simply to avoid making a stop on the way home. I am on a computer most of the weekday hours I’m awake, and I like it that way.
Anthony, Mods: You need to go to the link posted here:
ScottR says:
April 9, 2013 at 9:51 pm
Download the excel sheet and plot column S “U.S. Product Supplied of Finished Motor Gasoline (Thousand Barrels)”
Notice that it is the sum of columns T (reformulated) and U (conventional).
That is the real data and it matches more reasonably with the miles driven estimate.
I think maybe the data in your chart being “Retail sales by refiners” has something to do with it. It may be that the chart is not including sales by the off-brand re-sellers who are gaining a lot of market share as people are pinching pennies.