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.
Another factor in the unemployment statistics. When you pay people to be unemployed, you get what you pay for. [source]
I haven’t read the rest of the posts yet, so please forgive if others have already addressed this.
re: marchesarosa says: April 9, 2013 at 11:50 pm
I don’t where the cross over point is, but there is merit to Marchesarosa’s note. See the following, which shows total person’s employed, population increase, and some related relevant info: http://www.ritholtz.com/blog/2011/05/employed-persons-1999-2001-2003-2011/
re: Jan Kjetil Andersen says: April 9, 2013 at 11:51 pm
Don’t forget that beginning in 2011, the USA became a net exporter of refined petroleum products. So the total amount sold isn’t going to be a direct proxy to USA use either, or at least not since 2011. http://www.eia.gov/todayinenergy/detail.cfm?id=5290
@ur momisugly Steve Keohane:
Bartering and buying second-hand are both probably greatly increased. In the last couple years, I know I have bought quite a few pieces of furniture off craigslist, and clothing off ebay. I’m getting the furniture because (being a frugal person most of my life) I never had much in the way of solid wood pieces, and new products just seem flimsy and soulless. I’m getting the clothing off ebay because it’s cheaper than new and better made than most new products. Also, the older styles are less immodest. And don’t get me started on new vs old kitchen gadgets!
Another thought:
How much of agriculture use of fuel is included in those figures? Since crops have been declining because of the global cooling, I’m thinking farmers are less likely to be running their big machinery as much as before.
I see wheat is 696 today. My ex used to get around 350.
As I understand it, the price of wheat rises greatly during a solar minimum.
Let them drive Teslas!
(And I really hate that they abused Tesla’s name for their subsidized car)
OK. Here’s another thought:
My teenager has NO DESIRE to drive.(!) I forced my kid to take driver’s ed last summer. Yet my kid has never driven my car.
When I have talked about this with other parents, they say the same thing. Their teenagers seem to be sincerely lacking in get-up-and-go.
I’m a perfect example of this. I used to make 3-4 major (1,000mile) trips per year and would go on a dozen or more in-state weekend trips to model airplane shows. Since Obama came into office and the price of gas doubled and our income dropped 50%, I’m down to one or less major trips a year and maybe two or three in-state trips. All the community economies I used to bolster are now doing without my money (not just gas but hotels, food and shopping). I may be ‘greener’ but that also means that my lifestyle and those I supported are poorer for it.
Thank you for the updated data. (I suppose I should have refreshed the screen before locking in my prior comment.)
Comparing the underlying FRED data (average vehicle miles traveled) to US supplied finished gasoline (also converted to rolling 12 mon), I calcuate an average MPG in 1971 of about 11.8, rising fairly steadily to a current average MPG of about 20.5. There are no spikes, surges or irregularities in the trend.
Interestingly, the steepest increase is from 1979-1981. Nationwide MPG has been basically flat since 2000. The recent alternative fuels trends barely even show as a blip..
Frank K. says:
April 10, 2013 at 6:37 am
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.
*******************************************************************************************************
Funny we have the same problem in Australia. Soon “they” will want to change our nappies.
re: BioBob says: April 9, 2013 at 11:54 pm
Biobob, the Cash for Clunkers program demolished the used car market, and drastically increased the price of remaining used cars. That may have as much or more to do with the price increase as the unquestionable devaluation of our currency.
MattN says: April 10, 2013 at 3:35 am
SMC says:April 10, 2013 at 4:39 am
The unemployment rate only counts people who are ostensibly still looking for work. The labor force participation rate is at a very low level – down to 1979 levels. That means that there are many people who are not only unemployed, they are no longer looking for work either. They are either surviving off of welfare, disability, or living with someone who supports them. That where the 90 million number originates. See: http://www.zerohedge.com/news/2013-04-05/people-not-labor-force-soar-663000-90-million-labor-force-participation-rate-1979-le I’m sure you can find plenty of other sources for more detail if desired also.
@ur momisugly thelastdemocrat says: April 10, 2013 at 6:12 am
Unfortunately it does make sense, and it’s been happening. Companies aren’t hiring, or expanding. They are sitting on their capital, because of the gross economic uncertainty, drastically increased regulatory and tax burdens (e.g., Obamacare), fear of rampant inflation because of all the money printing by the feds, and so on. They’ve got to conserve capital to be able to cover these contingencies without going out of business. So you wind up with an economy that fails to create sufficient jobs for it’s expanding population, just as we have been seeing for some time now.
MattN says:
April 10, 2013 at 9:34 am
Rod: Don’t forget to include the millions of full time students in there, and the 90M number is even more absurd.
Yes, students who are not employed would also be in the 90 million. In fact, the 90 million comes from a calculation involving everyone 16 and older, so not only college students, but every non-working high school kid in the country who is already 16 is also included in the 90 million number. It’s a ridiculous number to cite when talking about the unemployed.
As I said, the real scandal is that of the actual 18 million or so who should be looking for work (because they were either looking or actually working five or six year ago), only about 6 million of them currently even want a job, most likely because they’ve found a cushy way to live without one, on our tax dollars.
I’m not against unemployment compensation, but paying people not to work for two years running, and then making it easy to get on disability afterwards, is scandalous.
philjourdan says:
April 10, 2013 at 10:35 am
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.
True for men, but false for men and women together which is what we’re talking about, at least since 1948, according to this graph:
https://en.wikipedia.org/wiki/File:US_Labor_Participation_Rate_1948-2011_by_gender.svg
You’re right about the participation rate for men. When they were the main breadwinners the rate was much higher than it is now. I suppose they started work early, often didn’t finish high school, or even start it, and worked until they died if they could, since they had no social security to rely upon. Plus, lives led working hard meant many didn’t live nearly as long as they do now.
The rate peaked around 2000 at about 67% and fell slightly until recently, and has dropped more sharply since Obama’s regulators have made it easy to join the unemployed ranks.
Rational Db8 says:
April 10, 2013 at 4:44 pm
… That means that there are many people who are not only unemployed, they are no longer looking for work either. They are either surviving off of welfare, disability, or living with someone who supports them. That where the 90 million number originates.
No, it’s not where it originates. The 90 million includes retirees, students, and stay-at-home moms/dads, plus any other category like that. Granted it also includes your welfare, disability, living-off-the-relatives crowd, but they are only a small component of the 90 million.
As I said earlier, there are about 245 million people in the U.S. who are 16 or older, not in the military, and not in an institution (jails and nursing homes, primarily). Of those aboiut 155 million are working. The other 90 million aren’t, but certainly shouldn’t be considered “unemployed,” unless you think everyone’s 16-year-old high school student should get a job, as well as their 85-year-old grandparents.
I think the unemployment situation in this country is horrendous, but we don’t need to use misleading numbers to make the case. The real numbers are sufficient to do that.
re: Saruman says: April 10, 2013 at 12:55 pm
I beg to differ. Romneycare is worlds apart from Obamacare. Romneycare was 70 pages long, Obamacare over 2300. Romneycare was widely supported throughout the very liberal state. A majority opposed Obamacare nationwide. Romneycare didn’t increase taxes. And while the cost of health care in Mass is very high, it did apparently mange to get the majority of the population covered – Obamacare by all estimate and projections will not.
I will grant you that there are a lot of very moderate Repubs – Paul Ryan being one of them. But at least he has the guts to actually put forth real legislation, legislation that actually at least helps slow the increase in spending and reduce the deficit (albeit too slowly, 10 years), and put entitlements back on sound footing. Yet he gets routinely branded as being “extreme” and the Democrats in the Senate will not even vote on his budget, etc.
Even so, I have to note also that Ryan’s budget’s and so on are a vast improvement on Obama’s. Take for example Obama’s latest budget – full of gimicks and it’s for $3.77 trillion, and he claims he’s cutting the deficit with that sack of cr#p. In other words, Repubs aren’t great, and they’ve a long way to go, but they are notably better than the Dems when it comes to fiscal issues. And at least they continue to oppose all the enviro-fanaticism as they can, rather than advocating pouring yet more $$ into it.
@ur momisugly Rod Everson says: April 10, 2013 at 5:46 pm
While your post has some merit, this is how the labor participation rate has been calculated for quite some time. I also have no problems counting 16 year old’s as unemployed. I started working regularly outside the home when I was 10 or 11 years old (babysitting), then in retail when I was 14. By 16, most of the kids I knew of also had part time jobs. If they wanted things, like a car or whatever, they had to work to buy those things rather than having them handed to them. As a result, they learned a bit about fiscal and individual responsibility, and developed a work ethic. Obviously I don’t expect 85 year old retirees to have a job, unless they want one, and there are some who do.
Regardless, by definition, people of working age who are not working, whether by choice, or disability, or inability to find work, are unemployed.
well, just as a nit pick… The USA also now exports petroleum products. While we used to do a lot of “Diesel for Gasoline” swap with Europe… As West Texas oil is now much cheaper than Brent (North Sea) we don’t have as much incentive to import gasoline, and have more incentive to export both. This tends to limit price drops on products.
So here in Kalifornia, Gas is well over $4 / gallon. Unemployment is crazy high. And our Governor Moonbeam is off in China begging them to buy more of the State…
Under those circumstances folks do NOT drive anywhere for a vacation.
A couple of years back I drove to Florida for a contract job. (Did it a couple of times actually). That’s about 100 gallons each way. ( I made that run at least 10 times on a couple of jobs so figure about 1000 gallons JUST for those jobs.) Now I fill an 18 gallon tank “once a quarter” and don’t drive to the far away grocery store… Call it less than 80 gallons. No job? No drive….
It’s pretty simple, really: Gas prices are NOT down, even with less demand. Wages in both real and nominal terms ARE down. Folks don’t have a choice. Note, too, that upper middle class retail is having issues as are middle high end restaurants. (Very upper crust is doing fine, and Wally World is doing fine… “Barbell”. The Middle Class are the folks getting squashed down into Wally World land.)
There is a global “race to the bottom” in currency depreciation with Japan and the USA both having a flood of money creation and China pegged to the $US in a Mercantilist way. The EU is in a slow motion bank run (being called a “Bank Walk”) after raiding the Cyprus Piggy Bank for Russian “contributions” and now the EU central bankers are eying Bank of Italy and Spain too… They are toast, and know it. Germany has decided not to keep funding the party, and everyone else is broke / in dept up to the moon. . So other than inflating the stock bubble more as they try to blow air back into the Housing Bubble the simple fact is that The Fed and the Japan Central Bank and the EU Central Bank are all trying to fix a fiscal spending problem with an easy money monetary tool and it doesn’t work.
There may still be time to recover this process, but none of the players are doing the right things. So will it end in a new great “bubble and bust”? Nobody knows. This is uncharted territory. (I.e. perpetual $Trillion+ deficits are literally off all charts…) but the highest probability is that it will end badly.
The simple fact is that China is collecting all the marbles and it will be up to them what happens. The USA (and increasingly the EU) have gutted their industrial capacity and sent manufacturing to China. So once China decides it owns everything, who can say no? The way to ‘fix it’ is break the mercantilist currency peg and have a decent energy and business supportive tax and regulatory climate in the USA (and EU) but that just isn’t happening, nor likely in the next decade.
So, sorry to say, I think this only ends when China tells us what to do next… and we can’t say a thing about it…
We simply do not have the capital infrastructure, nor the labor force, nor the regulatory and tax environment to compete nor to support our burgeoning retired / welfare / government worker populations. So we go bankrupt. The only questions, really, are how it will be hidden and how soon.
I reblogged early. Now I cannot reblog again to capture the update. I decided to write about it. Feel free to stop by. I think I made the important points at the top, but I might have written too much.
The graph I think contributes here is this: http://www.epa.gov/airtrends/aqtrends.html
It indicates miles driven tracked with GDP to about 2006. Then it decelerated relative to GDP. Energy tracked population growth until government policy drove up prices and fuel poverty.
This LLNL graph is informative too, but not as relevant to the discussion of gasoline usage reduction:
John Slayton says:
April 10, 2013 at 6:07 am
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.
this is an error of course. This is consumption per 100 km.
@Saruman
Generally agree with you, although not for the reasons you cited. To be clear, the Repubs are better, but I don’t think going off the cliff at 5mph in 40 years is a huge benefit versus going off the clifff in 3-10 years at 100mph with the Dems, but the Repub path gives us time to try and correct things. The democrat party is the greatest criminal enterprise in the history of the world. If you measure the wealth stolen from the public to fund the various great society programs, depending on which estimate is used I have seen between ~$70trillion up to $200trillion. Republicans have generally been on the right side of the debate all along, where they fail is when they compromise and accept the Democrat philosophy of government as valid. The modern Democrat theory of government is progressivism, which is a fancy way of saying some eutopian variant of marxist/socialist/fascist junk which they don’t like to admit to but clearly this is their philosophy. Many Republicans oppose this, however some are RINOs and clearly don’t care what goes on in the health of the nation so long as they are personally empowered, ie John McCain, Lindsey Graham, Olympia Snow etc. Ryans long term budget plan sucks, but in comparison to any Democrat plan it is stellar. We are so deep in the hole I am not convinced there is any way out of it in reality. We have had a spending problem in this country and it has been propagated by both parties, however the Democrat party has made that spending problem orders of magnitude worse than the other and unfortunately at this point it is not relevant since the odds are continuously shrinking that we will be able to escape from it without an earth shattering global economy destroying hyperinflationary period as you have noted. Ever wonder why the Dems have had no Budget for the last 4 years? The mob has nothing on the Democrat party. They are robbing us all blind and they do it right in our face and it’s all “legal”. Our representatives just keep rearranging the deck chairs on the Titanic paying no heed that we are full steam into calamity’s grasp. As I said before though, free enterprise maybe our only real hope, perhaps some game changing invention will come into view that can overturn all other trends and pull us through this, but it seems the odds are otherwise overwhelmingly against us. Modern Fracking and the O&G is trying hard and could be the dark horse to keep us from going under but that is under heavy fire from one of the many enforcement arms of the left, our fine super green friends.
I have a friend who spent some time in Zimbabwe awhile back, he has a stack of money they were printing during their hyperinflationary period, ever seen the pics of people using wheelbarrows to buy a loaf of bread? Of course here we have a large economy that is capable of producing its own energy and many other high value items that give us a distinct advantage in the battle but at some point everything is going to see a major correction and it will make the last one look like childsplay.
Rational Db8 says:
April 10, 2013 at 6:30 pm
@ur momisugly Rod Everson says: April 10, 2013 at 5:46 pm
While your post has some merit, this is how the labor participation rate has been calculated for quite some time. …
Regardless, by definition, people of working age who are not working, whether by choice, or disability, or inability to find work, are unemployed.
Look, words matter. By your personal definition they are apparently “unemployed.” No one else, anywhere, seems to be arguing that grandma should be considered part of the unemployed. Only those who’ve seized on the 90 million number, and I’d wager most of the talking heads using it don’t even realize grandma’s in the number they’re citing. (By the way, most of the time I agree with those very “talking heads” I’m referring to, but they’re way off base on this one.)
There really are 16 to 18 million people in this country who either want to work and can’t find any, or should be working but don’t have to because we’ve made it too easy for them to sit home (or too painful to give up their current benefits for what they’d receive by working.) Why trumpet a number that is completely irrelevant to the concept of unemployment as most people think of it?
Re: Rod Everson says: April 11, 2013 at 7:49 am
Rod, words do matter. I wasn’t ‘trumpeting’ the 90M number, I was explaining to others where the number comes from, and how the term labor force (job) participation rate (LFPR) is calculated. Using the terms as they are defined and used by the BLS, etc. Now you don’t happen to like those definition. While I would agree with you that the elderly ought not be counted as unemployed, other than perhaps to maintain our ability to compare LFPR over time, it doesn’t change the fact that they are included and defined as unemployed in the metric. It’s that simple. Were I to use words differently than they are defined, it would just serve to dumb things down all the more. Better to explain what such metrics use in their calculations instead, and go from there. We can have a similar discussion about the unemployment rate and inflation. Do we talk about the commonly used metric which pegs unemployment at about 7.8%, or I think it’s the U-16 rate which includes both unemployed and underemployed and is much higher? And how about inflation? The calculation for it has been modified I gather, such that if we used the same method as during Carter’s days, our inflation rate would be in double digits also. But because they redefined the calculation, we can’t easily compare to historical rates – not with any meaning. So, yes, words matter. How things are calculated matter. How the same metric was historically calculated matters.
It’s all Bush’s fault.