Courtesy of Doug Short.
Note from dshort: In response to a reader’s request, I’ve updated this gasoline series after a few months of unintentional neglect.
The Depart of Energy’s Energy Information Administration (EIA) data on volume sales is over two months old when it released (the latest numbers from mid-February), so the near-term correlation between gasoline prices and volume sales isn’t available. However, it remains an interesting rear-view mirror on a fascinating aspect of the US economy.
Because the sales data are highly volatile with some obvious seasonality, I’ve added a 12-month moving average (MA) to give a clearer indication of the long-term trends.
The next chart includes an overlay of monthly retail gasoline prices, all grades and formulations. I’ve shortened the timeline to start with EIA price series, which dates from April 1993. 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 (February 2012) is still about 6.2% below the pre-recession level. In fact, it’s at a level first achieved thirteen years ago, in April 1999.
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. Also, if we look at Edmunds.com for data on the top 10 best-selling vehicles, energy efficiency doesn’t seem to be a key factor, to judge from the weighting towards pickup trucks and of SUVs.
While on the topic of fuel-efficiency on gasoline sales (and as a happy Prius owner), I was rather surprised by a Polk survey report that made the rounds in April.
| While the selection of hybrid models in the U.S. has more than doubled since 2007, only 35 percent of hybrid vehicle owners choose to purchase a hybrid again when returning to market in 2011, according to recent analysis by Polk (See Table A). If repurchase behavior among the high volume audience of Toyota Prius owners isn’t factored in, hybrid loyalty drops to under 25 percent. [Full Report] |
Average Daily Volume Sales Per Capita
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 on a per-capita basis is 4.2% lower than it was at the end of the Great Recession. The gallons-per-capita series includes the complete EIA data, but since I’m using the 12-month MA, the red line starts in 1984. We see the double peak in March 1989 (the all-time high) and August 1990. The latest per-capita daily average is 17.8% below the 1989 high.
What does this analysis suggest about the state of the economy? From an official standpoint, the Great Recession ended 30 months before the most recent gasoline sales monthly data point. But if we want a simple confirmation that the economy is in recovery, gasoline sales continues to be the wrong place to look.
In addition to improvements in fuel efficiency, the decline in gasoline consumption is probably attributable in large part to some powerful secular changes in the US:
- The demographics of an aging population leaving the workforce, which we also see in the sustained contraction in the employment-population ratio
- A growing trend toward a portable workplace and the ability to work from home (I’m a typical example)
- The rise of social media (Internet apps, games, the ubiquitous cell phone for talk and texting) as alternatives to face-to-face interaction requiring transportation.
We are indeed living in interesting times.
