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.
MarkW says:
April 10, 2013 at 6:36 am
If families have more than one car, they may be trying to concentrate their driving
=================
The numbers are simple to reconcile.
If two people ride 10 miles in the same car, they both are reporting 10 miles driven. However, they are only buying 1/2 as much fuel as compared to driving in separate cars.
If you don’t have the money to run a car you are going to catch a ride with a buddy and chip in gas money. You aren’t driving less, but you are only buying 1/2 as much gas.
Miles driven is correct, but the gasoline sales chart is highly misleading.
US motor gasoline consumption, for the quarter ended March 2005 was 8.89 mbpd (Jan. 2008 EIA STEO).
For the quarter ended March 2009 (the depth of the recession), consumption was 8.79 mbpd (April 2013 STEO, released yesterday).
For the quarter ended March 2013, the number was 8.42 mbpd. (EIA April 2013 STEO).
Thus, as I predicted in the 2009 article “Peak Oil Economics”, US oil consumption continues to fall, but not nearly as dramatically as the chart presented by Anthony above.
Look:
1) Less labor cost, same amount of goods produced [due to automation, out sourcing], increased income -> Stock Market UP.
2) Federal Reserve stealing wealth by printing money -> Stock Market UP.
3) Collapse in total work force employment [less tax revenue] -> Eventual Economic collapse !
Number 3 above is the scythe!!!
NOTE: Not fiction, look at Argentina, Brazil, etc., 30 years ago.
Notice the orientation of the people you describe. They are Malthusians. In actual fact, the pie is not limited, but they have been bred to think it is, so yes, they think the more you have the less they have. Thus their insistence that everyone except them has to do with less.
Non-Malthusians do not see a pie, but an opportunity. What they have has no relation to what you have, so if you have more, it does not affect them.
MattN says:
April 10, 2013 at 7:07 am
“’MattN, Shadow Government Statistics is reporting about 23%’ …That is a patently absurd unemployed number”
No, it’s not. SGS takes the BLS’s U-6 numbers and then adds in “…SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994…”
This gives us a number that can be compared to to the way unemployment used to be reported before the Clinton administration redefined things to make the economy look better.
@Doug Huffman I get it. An average city bus carrying ~50 passengers will equal your 50MPG VW in P-MPG. Unfortunately, as of 2009 the Dept. of Energy reported that the average number of passengers on busses was 9.2, which reduces those efficiency numbers.
I was speaking generally about the delivery vs. consumer driving. In a perfect world, if every customer were equidistant from the purchase location, yes, deliveries would shave almost 40% off mileage. Unfortunately, as with busses (and CAGW), reality is different from theory.
Isn’t gasoline CONSUMPTION a more reliable proxy than retail sales by refiners? Seems to me that the data here:
http://www.indexmundi.com/energy.aspx?country=us&product=gasoline&graph=consumption
and here:
http://www.eia.gov/tools/faqs/faq.cfm?id=23&t=10
are more important indicators of demand and use. A few comments have focused on this data and I think they are on the right track.
Seems to me that refiner sales are NOT going to be the data you want to reflect total gasoline retail sales. I would argue that gasoline consumption levels are going to be more reflective of product volume demand and sales, and thereby a better indicator of economic activity.
Rod: Don’t forget to include the millions of full time students in there, and the 90M number is even more absurd.
50% gas decrease, 90Million unemployed. April 1 was last week, fellas….
They don’t need a lot of fuel when they collect dual electronic payments each month for a) disability, the fastest growing part of the budget, and b) food stamps, the other top growing item in the budget. There is a growing sense that structural unemployment is setting in with very significant deterrents to taking a risk with working and the commuting that goes with it. And the cyclical unwinding of these factors is not as clear as it was in past recoveries. Another point is that the rate of women entering the workforce topped out around the year 2000 and we did not notice as the housing bubble and debt binge worked up to the breaking point. Generally, we borrowed to make up for the deceleration of growth of two-income families in the period of 2000-08. In the aftermath of the debt unwinding and this background female labor force growth story, recovery rates and even long-term growth are being reset to a new normal that is not a fuel intensive scenario. Some of these overlaid long-term cycles remind me of the yet-to-be-recognized factors of significance in climate models.
One possible explanation of the sharp drop in gasoline usage is online sales.
I used to drive down to a local store and see if they had the item I want in stock. After looking at the true cost of such a trip .15-20 cents a mile and climbing at the time (fuel, tires, wear and tear etc.), plus putting a value on my time spent shopping, I started buying a lot of goods on line.
Those are delivered in a highly efficient delivery route which expends far less gasoline (usually diesel and natural gas powered delivery trucks). The proportional amount of fuel expended per retail sails made is going to make a substantial shift just from that. As gasoline got more expensive I also started doing the same thing I did in the late 1970’s early 1980’s and combine trips, making several stops on the same trip. I now exclusively shop for groceries on my way home from work. My extra distance traveled for the groceries is now measured in feet as the it is only the distance from the turn off to the parking spot in the store lot and getting back on the highway I use every day to get home from work. If I have to make a short trip I pause for a moment and try to think up some other task I will need to do eventually which I can accomplish on the same trip.
I also have more than one car, when fuel is expensive I take the more economical car, that switch amounts to about an 18%-25% reduction in fuel used for the same miles driven.
This is a net effect of millions of such decisions, plus changes like telecommuting a couple days a week, or people shifting jobs to shorten commute distances, eating at work with a brown bag lunch instead of running down to the local fast food outlet, or car pooling several workers instead of each driving by them selves.
Cash for clunkers got a lot of older cars off the road. Perhaps that resulted in an increase in average fuel economy of cars on the road that was greater than the increase in average fuel economy of new cars that were being sold?
>> RE: marchesarosa says:
April 10, 2013 at 1:30 am <<
The "Labor Force Participation Rate" is not based on the entire population, but only on the subset that is working age. The participation rate includes those looking for a job, so the 63.3% includes 7.8% who are unemployed but looking for a job. Likewise the 67.3% in 2000 includes the 4% who were looking for a job. Your calculation should be (.673-.040)*212.5M compared to (.633-.078)*241.4M [est]. That gives 134.51M in 2000 vs. 133.97M in 2012. Basically the US workforce has dropped 0.37% from 2000 although the working age population has grown by 13.6%.
http://economics.about.com/od/unemploymentrate/f/labor_force.htm
http://www.bls.gov/fls/flscomparelf/tables.htm#table12_epr
MattN says:
April 10, 2013 at 3:35 am
Unemployment is not at 25%…..
—
It would be close to that if unemployment was calculated the same way they did back in the 30’s.
If you have given up looking for work, you are no longer counted as unemployed.
If you took early retirement rather than being layed off, you are not counted as being unemployed.
If you are on permanent disability and no longer looking for work, you are not counted as unemployed.
If you are a teenager who can’t find a job, but aren’t collecting unemployment because you have never had a job, you aren’t counted as unemployed.
tim in vermont says:
April 10, 2013 at 3:59 am
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.
—
Didn’t Boston recently complete the “Big Dig”?
I think we need McIntyre to audit this article.
Cash for Clunkers was a one-time short lived experiment and would show up in the data as a step change.
The term is “not in the labor force” which the 90m are not. Some full time students ARE in the labor force (I was). Some retirees ARE in the labor force. So blanket statements about what constitutes the 90 million is not always correct.
But we do know that 90m of working age are not doing so. For whatever reason. That is then used to find the “labor force participation” rate. And that number is the lowest it has been in almost 100 years. Even though the population was a lot smaller 100 years ago, the RATE was actually higher.
I don’t know exactly what the correlations between the varying data presented here is and I don’t particularly care. The only thing that should be registering is that we are in serious trouble. Whether you believe Obama is doing this deliberately or not is irrelevant, he is doing it. When the dollar is no longer the reserve currency all of us are going to be hurting. When gasoline costs $50/gal I hope all the numbskulls that voted democrat all of their life do the math, although I don’t suspect them to given they voted the worst president in the history of the US back into office (with a healthy helping of voter fraud to back up the idiots). Of course at that point we will be in far worse shape than worrying about where to get gas in all likelihood. Or perhaps the people working for good in what is left of the market (the private sector businesses trying to keep their heads above water while the Obama administration cuts them off at the knees) will manage to drag us through this without a total collapse. I am hoping for that but I am planning for worse. By the way, the Euro will collapse along with us, possibly before us given current indicators.
Silver is a relative bargain lately (down .28 today at $27.60)…just sayin
Anthony’s not the first to have noticed this. The blog Political Calculations
had an item on this about 2 years ago:
http://politicalcalculations.blogspot.com/2011/01/why-are-americans-driving-less.html#.UWWkzVc0–U
Rod Everson, I hope folks read both your posts. It needs a Correction, not an Update. JP
>When gasoline costs $50/gal I hope all the numbskulls that voted democrat all of their life do the math
Matt, the Repubs are no better. Have you forgotten about Romney the healthcare architect or Paul Ryan the auto bailout lover? Last time I checked our military spending is greater than that of the next 14 countries combined.
This will end in tears.
“The 2012 fiscal condition of the United States suffered its worst annual deterioration in the history of the Republic. Based on generally accepted accounting principles (GAAP-based accounting), the actual federal deficit hit a record $6.6 trillion in the year ended September 30, 2012, a level that was fully 42% of the nation’s annual GDP… the United States will be doomed to an eventual hyperinflation, as the government prints money to meet its obligations, a process that already has started.” http://www.shadowstats.com/article/no-500-special-commentary-us-government-gaap-based-2012-financial-data
I concur with the comments above – the Retail Sales numbers CAN’T be right. Drilling into them to the raw data calculates an MPG in 1984 in the low 30s and an MPG in 2012 above 90. (That’s even after adjusting for the fact that the miles driven are rolling 12 months and sales are actual.) There could be some slight distortion by the shift to alternative fuels but there hasn’t been nearly enough shift to diesel or other fuels to make the reported MPG show what results from those Retail Sales numbers
As a retired Red Coat, forgive me if I speak out of turn, but does not the fall in the US economy shown in these graphs commence with the arrival of one Barack Hussein Obama II?
The current inflation number of ≈2% is absurd. If inflation was calculated now the same way it was calculated during the Carter presidency, inflation would be about 11%. Anyone who buys gasoline or shops at a grocery store knows this is true.
And here is the real hockey stick.
Couple thoughts:
1. Have lots of folks who lost their homes moved in closer to work? Perhaps they no longer live in McMansions in the suburbs, but are renting closer in?
2. People typically used their credit card to pay for gas, right? Now that there are fewer credit cards (sorry, no stats), and maybe they’re using debit cards or cash to pay for gas, they are buying less gas and car-pooling more?
I think of this because in the early 90s I typically drove 100 miles a day. Now I often don’t drive even 10 miles a day.