Courtesy of Doug Short.
What is the relationship between retail gasoline prices and the volume of gasoline sales? The first chart below shows the monthly data for U.S. Prime Supplier Sales Volumes, courtesy of the Depart of Energy’s Energy Information Administration (EIA). The numbers are updated monthly with about a two month lag. The numbers are highly volatile and have some seasonality, so I’ve added a 12-month moving average (MA) to facilitate our understanding.
The next chart includes an overlay of monthly retail gasoline prices, all grades and formulations. The retail prices are updated weekly, so the price series is the more current of the two.
As we would expect, the rapid rise in gasoline prices in 2008 was accompanied by a significant drop in sales volume. With the official end of the recession in June 2009, sales reversed direction … slightly. But the 12-month MA of volume for the latest month (June 2011) is still about 4.8% below the pre-recession level. The 12-month moving average of sales as of June 2011 was the lowest since August 2001. The full impact of the sharp rise in gasoline prices since last September is no doubt a factor in the June sales volumes. On a weekly basis, the interim price peak was the week of May 9.
Some of the shrinkage in sales can be attributed to more fuel-efficient cars. But that presumably would be minor over shorter time frames and would be offset to some extent by population growth.
The next chart adjusts the 12-month MA of sales volume for population growth based on the monthly data for Civilian Non-Institutional Population over age 16 from the Bureau of Labor Statistics, via the St. Louis FRED repository. What we see here is that gasoline sales volume, on a per-capita basis, is lower (-1.7%) than it was at the end of the Great Recession.
What does this analysis suggest about the state of the economy? From an official standpoint, the Great Recession ended 25 months before the most recent gasoline sales monthly data point. But if we want confirmation that the economy is in recovery, gasoline sales is the wrong place to look.
Note: The next gasoline volume sales release is scheduled for September 21, 2011.
