Global| Jul 07 2008U.S. Gasoline Prices Up - Driving Down
by:Tom Moeller
|in:Economy in Brief
Summary
Perhaps 2.2% doesn't sound like much, but as a measure of the degree motor vehicle miles driven in the U.S.has fallen, it continues an unprecedented decline in demand. That follows an inexorable rise in vehicle miles driven. Just [...]
Perhaps 2.2% doesn't sound like much, but as a measure of the degree motor vehicle miles driven in the U.S.has fallen, it continues an unprecedented decline in demand. That follows an inexorable rise in vehicle miles driven. Just since 1993, total mileage driven (the distances traveled by an increasing number of vehicles) had risen by one-third.
And it wasn't just the latest spike in prices that affected drivers' behavior. The twelve-month average of vehicle miles driven peaked back in late-2006. Since that all-time peak, vehicle miles are down 1.5%.Last month, gasoline prices moved above $4.00 per gallon (which was double their average price in 2005). In response, vehicle miles driven fell 2.2% from the first four months of 2007. As further emphasis of the degree to which vehicle miles fell, 2008's first four months' total miles driven was the lowest in three years. (The data for this past May will be available in roughly two weeks in Haver's USECON data base under "Other Stats.") 
Comments made this past April from the U.S. Department of Energy regarding gasoline prices can be found here.
In addition to driving fewer miles, motorists responded by buying fewer of the less fuel efficient light trucks. Data released last week indicate that June sales of light trucks overall fell to their lowest level since 1995 (-24.3% y/y). The relatively fuel inefficient U.S. made trucks fared even worse. Domestic light truck sales of 4.98 mil. (AR) units were at their lowest level since 1993 (-24.6% y/y). Sales of imported light trucks also were hit and show a 22.8% y/y decline. But the decline was from record levels in 2007.
Clearly, the rise in crude oil prices is behind the surge in gasoline prices. Near $140 per barrel the cost of a barrel light sweet crude (WTI) was double that of a year ago.
Crude Awakening: Behind the Surge in Oil Prices from the Federal Reserve Bank of Dallas can be found here.
| April | March | April '07 | 2007 | 2006 | 2005 | |
|---|---|---|---|---|---|---|
| U.S. Vehicle Miles Traveled (million) | 245,888 | 246,182 | 250,616 | 2,993,100 | 3,018,390 | 2,968,576 |
| Year-to-Year | -1.8% | -4.3% | -4.2% | -0.8% | 1.7% | 1.1% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
