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.
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marchesarosa says:
April 10, 2013 at 4:20 am
So let me offer some historical perspective. The best analysis I’ve heard comes from Charles Krauthammer, who said that historically it can be shown that every nation’s economy collapses when the debt/GDP ratio gets in the 90-100% “red zone”.
When Obama was first elected, that ratio for the US was 42%; when he was next elected, it was at 72%. Today’s news indicates Obama has submitted a $3.77 Trillion spending proposal that has both parties riled. At the current rate of government spending and quantitative easing (QE1, QE2, and now QE infinity), the US will reach the debt/GDP “red zone” before Obama is finished with us… errr… finished with his second term (what’s the difference, right?) And if you want to know if it’s deliberate or the most massive case of incompetence ever perpetrated on a nation, one only has to study Obama’s mentor Frank Marshall Davis.
But wait, there’s more: The first four years of Obama undoes eight years of Reagan (and those were booming times, let me reassure you):
http://amoraloutrage.wordpress.com/2012/05/06/four-years-of-obama-undoes-eight-years-of-reagan/
Or you can compare the current “recession” with the past five for a sobering realization the US government isn’t fixing the problem:
http://economix.blogs.nytimes.com/2011/07/08/comparing-recessions-and-recoveries-job-changes-2/
One telling critique of the world-wide economy is to see all the major currencies in terms of gold since 2000. In 12 short years, the average drop is 80%! In other words, precious metals have performed exceedingly well over the past dozen years while all major currencies have cratered.
So while you say there’s a lack of congruence between the various measures, the major indicators don’t look good at all. You can tout the stock market’s record high as a positive, but with the Fed pumping over a $Trillion of funny money into the economy every year (and plans to continue doing it until it collapses, since that’s reality), what you’re seeing is nothing but smoke–smoke from a burning economy.
But the final nail in our economy will be the switch from the dollar as the world’s reserve currency. Already China is doing deals with Australia that avoid the dollar completely, as are Iran and Russia. And when that becomes the norm, watch for free-fall of our currency as all nations dump the dollar. Our economic irresponsibility will have destroyed a once-great nation.
You’d better pray at that point the Chinese don’t come to collect on our debt.
This theme is examined over at The Motley Fool:
http://www.fool.com/investing/general/2013/03/27/when-americans-stopped-driving.aspx
While they can’t come up with one or two solid reasons for the decline, the article points to standard themes like higher gas prices, a population shift from the suburbs to the city, and a demographic shift of fewer “highly mobile” 34-43 year-olds. Interestingly, lower gasoline consumption means the US has been a net exporter of gasoline since 2009:
http://www.fool.com/investing/general/2013/04/09/where-in-the-world-is-our-gasoline-disappearing-to.aspx
MattN says:
April 10, 2013 at 3:35 am
“… Also, 90million people out of work? Come on, that’s 1/4 of the US population. Unemployment is not at 25%…..”
MattN, Shadow Government Statistics is reporting about 23%. John Williams, who runs the site, is in my opinion the Steve McIntyre of economic statistics. So, yes, unemployment is much, much higher than what our leaders would have us believe.
Also, regarding GDP numbers, it’s important to remember that GDP (GNP) is a Keynesian construct which reflects their view of the value of government spending (fiscal policy). So, any money that the Fed manufactures out of thin air that is then spent on, say, a dog park, is counted towards GDP. $700 hammers, “investments” in things like Solyndra, bridges to nowhere, bailouts to needy folks like Goldman Sachs, etc. all are counted as contributing towards national wealth.
The CAGW crowd did not invent fuzzy math (and I’m not talking about the good kind of fuzzy). It’s been around as long as governments have existed.
@ScottR
Not sure what you’re getting at, but the data you provided pretty much confirms Anthony ‘s conclusions.
While his raw numbers may not be the same as yours, the trends are all heading down.
I took the liberty of plotting the last ten years of data for:
Finished Petroleum Products
Finished Motor Gasoline
Reformulated Motor Gasoline
Conventional Motor Gasoline
Here’s a link to the Excel file: http://sdrv.ms/Zh9bJy
If families have more than one car, they may be trying to concentrate their driving on the car that gets better mileage. That might explain some of the difference between the miles driven and the gas bought numbers. People might also be investing in products that help their existing cars get better mileage.
Inflation is carefully reported, though hidden in innumeracy. The value of a commodity, a barrel of oil or DJIA, changes only ponderously, while its cost varies by the minute. Invert the relation to see inflation, barrels/US$ or average industrial/US$.
Pamela Gray says:
April 10, 2013 at 5:16 am
“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.”
—
In my opinion, a good life means — FREEDOM! LIBERTY! PURSUIT OF HAPPINESS!
I would concur with you that I would rather get one appliance to last 20 years versus 4, and that living more simply is better and having a lot of stuff. But that’s me. Not you – or anyone else. What offends me most about modern society is that someone (usually someone in government or climate “science”) appears to know what’s best for everyone. You drink too much soda! You eat too many hamburgers! You make too much money! Your house is too big! You’re too successful – you must have cheated to be that successful! You can’t watch that news network! You must vote for this political party! You must drive this kind of car! You must pay a carbon tax because YOU are responsible for global warming! I’m, frankly, sick of these nanny state hypocrites (especially those prominent hypocrites who populate climate “science” community), and will continue to resist their efforts to rob me, my children and grandchildren of our freedoms.
@J Barber Wouldn’t all that stuff ordered online from Wal-Mart need to be delivered in vehicles that use substantially more fuel than a passenger car? I realize that consolidation of deliveries to highly populated areas offset that somewhat, but it still doesn’t explain the drop off.
“That says to me that many people have just stopped buying gas. Consider that 90 million people are now out of the workforce.”
I think you hit the nail on the head with that comment – people have to drive to work & if they aren’t working, they arent driving. Remember that unemployment numbers only reflect people looking for work, & not everyone who has given up looking for work – who also arent driving – this maybe be a better statistic than unemployment % in looking at the real unemployment
robbcab says: April 10, 2013 at 6:38 am “Wouldn’t all that stuff ordered online from Wal-Mart need to be delivered in vehicles that use substantially more fuel than a passenger car?”
No. mileage is not properly measured in naked miles/gallon, but more properly in passenger-miles/gallon or ton-miles per gallon.
GD HD motorcycles are among the least efficient vehicles though their devotees can’t see beyond the end of their unmuffled exhaust ‘pipe’.
My aforementioned VW can get around 200 p-mpg.
Well the data seems fairly robust to me. This leaves two alternatives:
If we are talking domestic sales from refineries, there is that option that the data is only recording US refineries and perhaps the US is importing more already refined oil?
I saw some indication that this may be true from this news article:
http://www.reuters.com/article/2011/09/27/us-conocophillips-trainer-idUSTRE78Q5R320110927
For instance, if you look at that article, back when the largest drop happened, (Sept. 2011) a couple of refineries shut down and this chart might be over-emphasizing the slow-down in sales.
Of course, the other option is that with decreasing volume of sales that the prices of gasoline are not going down because of limited supply. (this could be done on purpose to keep prices high). This would mean that once sales bottom out at a production of X, that various refineries simply shutter and so the demand is kept high in relation to total supply. This could be simply a short-term thing that will happen until prices return to appropriate levels. On the other hand, with this many slow-downs, we could be seeing a change in actual driving habbits in our country due to high-priced fuel and thus what we see is a natural market correction that will drive prices back down but not until driving habbits change for long enough. Its hard to tell really, but this does point to a change in driving habbits plus a change for less mobility at the same time for Americans. Fairly troubling…but no idea what this really means yet.
The data in the third chart are highly misleading. Actual motor gasoline consumption declined only 5.8%. See http://www.eia.gov/totalenergy/data/annual/xls/stb0513c.xls
The increased use of energy and using it more efficiently will pull us out of our present economic mess. However, this process will require some changes in our social behavior. most of those that are not in the paid workforce are on welfare, retired, stay at home parents, or do not have the skills or will to do the work that needs to be done. Computers robotics, and energy using machines have increased our effficiency and in the process have replaced many manual labor jobs. All those that are unemployed must be supported in some way because they must spend money to continue to exist. They are consumers that contribute to our consumer driven economy. I suggest we do a drastic overhaul of our tax and social system to catch up with our technical advances. I don’t think that this will happen with out some drastic changes in our congressional organization which may require constitutional amedments.
“MattN, Shadow Government Statistics is reporting about 23%”
That is a patently absurd unemployed number. 90M people is roughly half the 18+yo adult population of the US.
The US has become a phony economy based on excessive private and especially public sector debt.
The US has a $16.5 trillion national debt, a $600 billion trade deficit, $222 trillion in unfunded liabilities (primarily in Medicaid/care, Social Security and pensions), $1 trillion/yr budget deficits, $3 trillion in state/municipal debt and all this senseless debt is being funded by Fed money printing.
This fiasco will not last much longer.
Energy (gasoline) prices drive the US economy. Stable, low prices during the Clinton years grew the economy. Rising real prices since 2000 have killed it. The same thing happened back in 1980 when gasoline prices jumped and the economy tanked.
http://www.randomuseless.info/gasprice/gasprice.html
Printing money while enacting policies to raise energy prices is no different than having one foot on the accelerator and the other on the brake. You will quickly burn the car out.
You cannot for long take money from an efficient Peter and give it to a less efficient Paul and expect to grow the economy. Over time there will be less real money available to both Peter and Paul. The truth of this is self evident in the employment numbers and energy prices.
Without real money you cannot hope to transition the economy to “green energy”. Neither can you make people mend their ways by punishing them with taxes. They will hate you for it and take their revenge in ways you cannot defend. People will cheat the government if the government is seen as unfair. Corruption and decay will follow as night follows day.
Reward Peter for his efficiency. Over time Paul will get the message and mend his ways. Otherwise, Peter will recognize that the system is unfair and will move his efficient operation to China or somewhere else that does reward him, or he will recognize that he cannot win and become like Paul.
Why break your back carrying Paul if there is nothing in it for you? Might as well stop and let Paul carry his own weight. No matter what governments might think or try, Peter is no fool. He will not let you bring him down without bringing your own house down as well.
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%.
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.
There is a whole bunch of stuff going one here, and the net is a fruit salad.
VMT is not just cars, it includes both pick up and delivery (local) and long haul trucking, almost all of which is diesel, and which is down for two reasons: recession meaning less movement of goods, and growth of intermodal which is three times as fuel efficient as long haul trucking.
EISA07 requires the addition of up to 10% ethanol. Theat blend wall was approached in 2012. Ethanol has only 2/3 the volumetric energy density of regular gasoline (one reason all the EPA numbers are off, since the regs are based on pure gas). The net reduces refined gasoline per mile by about 3-4 percent.
There has been a shift in vehicle mix toward cars and away from ‘light truck’ which gives a large gain in MPG. There has been a slight improvement in MPG per vehicle type mandated by CAFE.
There has been a reduction in commuting miles driven by a trend toward urbanization, in part because of the collapse in the value of the suburban housing markets.
And for Kyoto emissions,mthere has been a shift away from coal and toward combined cycle natural gas. The most modern extra super critical coal plants are about 41% net thermal efficient, and the average (including older and smaller plants) is 34. CCNG run as base load is 55% efficient, and the newest Siemens unit (590 MW in Germany) hit a record for 2012 of 60.9%. The net of chemistry and thermal efficiency means CCNG produces about 1/3 the CO2 per MW that coal does. It doesn’t take the shutdown of very many old inefficient coal plants, replaced by CCNG, to cut CO2 some in a recession.
Complicated systems like the economy seldom have simple answers.
SMC says:
April 10, 2013 at 4:39 am
The 90 million out of work figure is out to lunch. Where does that number come from?
Yes, the 90 million number is “out to lunch.” I don’t know why people keep citing it. Where it comes from is taking the entire U.S. population, subtracting the children, the military, and those in jails and nursing homes (the institutionalized), giving you the total adult population available to work and then subtracting the employed from that.
The numbers as of March 2013 per http://www.bls.gov/news.release/empsit.t01.htm
Non-Institutionalized Civilian Adults 16 and over: 244,995,000
Working Adults 16 and over, the Civilian Labor Force: 155,028,000
Adults 16 and over not working: 89,967,000 (the “90 million”)
The 90 million includes every stay-at-home mom/dad, and every retired person in the country not residing in an institution. It’s ridiculous for anyone to claim that we have 90 million people in this country out of work, because most of that 90 million have worked all their lives and are now retired, or never intended to work, choosing to stay home and raise kids instead.
In fact, the same report shows 11,742,000 officially unemployed, and if you figure that about 2.5% of the civilian adults have dropped out of the labor force due to the economy (the reduced labor force participation rate from 66% under Bush to 63.5% today) you get another 6.2 million or so who should be employed. Adding them to the 11.7 million officially employed and you get about 18 million who should be working or would like to work.
Interestingly though, the report also lists those who “currently want a job.” That number is only 6,722,000 people. In other words, of the 18 million who should be working, nearly 2/3 of them are comfortable right where they are, which is most likely on the dole.
The 90 million number is ridiculous, and the fact that it circulates at all is a testimony to the economic illiteracy of our news media, both left and right, and most of its readers. The real scandal is that we have about 10 million people who were either working in 2008, or were looking for work, who no longer want to work, but aren’t at retirement age yet. The scandal? We’re spending our tax dollars convincing them not to work, and it’s working really, really, well.
Is it possible the disconnect in retail gasoline sales and miles driven may be due to the export of gasoline? Where retail gasoline sales do not reflect domestic gasoline consumption? It would seem an odd oversight, after all the gasoline sold has to go somewhere…
Secondly, when this issue was pointed out a couple of years ago, the disparity in gasoline sales and miles driven was off somewhat but not to this level. At the time I concluded that people were limiting their short trips (low mpg events) to the store by combining activities and driving greater distances (higher mpg usage) using cars for going on vacation thus increasing the overall miles per gallon efficiency. The upshot meaning that cars were being used in their most efficient mpg range of service, the long haul trip, i.e. minimal city driving with it’s stops, braking and idling times.
But we should also not discount the effect of high gas prices on RV motor homes which typically get 2 to 4 mpg, the RV industry crashed with the Recession back in 2008 and not recovered. Which brings me to the point summer vacation activities (RV, boating, ATV, etc.) may also be off significantly. Those activities use gasoline but are NOT included in the mileage estimate.
Which leaves us with a disturbing third possibility, the conspiracy theory, the government is mis-reporting (under reporting) gasoline sales for a political benefit to claim their environmental policies are having the intended effect of saving the environment through more stringent regulation. However, in typical fashion they have overplayed their propaganda to levels of un/dis-believable proportions.
I live in Los Angeles, so traffic is a constant concern. While I genuinely believe that the economic downturn has altered driving habits based on what I see. It has made parking a nightmare. The reason is very simple, the downturn closed many retail establishments in the greater LA area, forcing people who live in areas with fewer remaining stores to shop in places where there are more. In effect, the downturn is forcing the people of Los Angeles to drive further than normal to get what they want/need, and so they drive even less as a result.
The 405 and 91 fwys are generally still a nightmare though.
More importantly, online shopping is just now beginning to seriously replace the retail establishment. This means fewer miles driven as UPS delivery is a much more efficient method of delivering goods to consumers than everyone getting in their cars and driving to the electronics store.
All that said, the labor participation rate should be front-and-center in the political debates, but it’s completely ignored.
Frank K. says:
April 10, 2013 at 6:37 am
I’m, frankly, sick of these nanny state hypocrites
+++++++++++++
Why is it that the people with the largest carbon footprints in the world go around trying to force the rest of us to reduce our carbon footprints?
Fear and Greed. Having gotten what they want in life, they know there is only so much food on the table. If the rest of us try and get our fair share, they are worried they are going to have to give up some of theirs.
So, their message to the rest of us is “take less” so that we can “take more”. Do it for the good of the planet/children/polar bears/etc. Makes no difference, whatever tugs your heart strings and loosens the strings on your wallet.
Anyone who believes that total gasoline usage in the U.S. has fallen 50% in less than a decade has their b.s. detector disabled today.
I don’t know what that chart really shows, but it’s not what the author asserts. We’d be in a depression worse than the 30’s if actual gasoline usage had fallen that far, that fast.
Fortunately, this being WUWT, it didn’t take long for the readers to begin to straighten matters out.
P.S. Anthony, I think a situation like this calls for an: “Update: this graph does not show what the author claims it shows” with a reference to a comment that explains why, or some such. Handle it anyway you want, but once it’s clear that an article is b.s., readers should be made aware of that without having to dig through the comments to figure out why.
Supplimental info on unemployment/workforce from last week.
http://globaleconomicanalysis.blogspot.com/2013/04/jobs-88000-unemployment-rate-76.html
Steve Keohane says: April 10, 2013 at 5:41 am “Although there is no metric, bartering is way up.”
Bitcoin Hits New Record, Crosses $250, Submitted 04/10/2013 08:12 -0400
http://www.zerohedge.com/news/2013-04-10/bitcoin-hits-new-record-crosses-250