Skip to comments.Guest Post: Why Is Gasoline Consumption Tanking?
Posted on 04/03/2012 7:50:20 AM PDT by Mechanicos
Retail gasoline deliveries, already well below 1980 levels, have absolutely fallen off a cliff.
Deliveries in November 2011 were 30.9 MGD, a staggering 47% decline.
What other plausible explanation is there for the decline from 42.4 MGD in July 2011 to 30.9 MGD in November 2011 other than a dramatic decline in discretionary driving? That 27% drop in a few months in unprecedented, except in times of war or sharp economic contraction, i.e. recession.
(Excerpt) Read more at zerohedge.com ...
It’s all those new Chevy Volts on the road /sarc
Seriously though, there is a danger lurking in these stats.
The general public will look at this vs. the skyrocketing cost of gas, and come to the conclusion that the Law of Supply and Demand is not working anymore.
And from there, it’s only a short hop and a jump to the modern Leftist’s argument that “Capitalism has ceased to function, and it’s time it be replaced with something else”.
ts all those new Chevy Volts on the road /sarc
D’oh ,you stole my line ,but I think a lot of people wanted to say the same thing.
People use a lot less gas when they don’t have to drive to work anymore.
People are not driving as much—I know I am not—I rethink any long distance plans now—I just can’t afford it. A trip of 50 miles was common before—Now I limit my driving.
I’ve got an easy fix...
Drop the price and people will buy more.
Keep raising it, and you’ll see a lot less being sold.
People use a lot less gas WHEN THEY DON’T HAVE ANY MONEY to spend on driving, groceries, clothing, shoes, furniture, etc etc etc etc!!!!
Interesting article. Something is definitely happening if the data are correct. Intuitively, it doesn’t make much sense given population growth alone. I wonder if our aging population and lower job participation rate are the prime reasons why consumption is lower over the long term. However, it is much harder to explain the precipitous decline over just 13 years.
I finally saw something that made sense as to why the price of oil is going up - namely, that Japan has just about all of their nukes shut down post-earthquake and has to buy oil to make up for much of the lost electrical generation capacity.
Economies of scale go in reverse when you decrease production.
This is bad economics. A decrease in quantity consumed that occurs at the same time as an increase in prices (gas prices have risen), is easily attributable to a decrease in supply. I.E. the supply curve has moved up and to the left:
Simple undergraduate economics, really.
With unemployment as high as it really is, non of those are driving to work. More people on the government dole, sitting on their couch collecting checks. Who among them need to drive? Retailers purchasing less inventory, less trucks on the road. Gas prices going $4.00 plus per gallon, people drive less. Inflation hitting food prices, while paychecks stay the same.....just some thoughts.
> The general public will look at this vs. the skyrocketing
> cost of gas, and come to the conclusion that the Law of
> Supply and Demand is not working anymore.
Gas prices have been climbing steadily for a while now, since Jan 20, 2009, IIRC. And even when prices dipped for a few months late last year, people continued to find ways to save gas.
Our household stated implementing gas austerity program shortly after prices began to rise noticeably in 2010. We don’t do much discretionary driving, we have been consolidating shopping trips, and I have been working from home a lot more.
It means less time with extended family, but at least we still have Skype video calls.
>>>People use a lot less gas when they dont have to drive to work anymore.
And when their unemployment runs out, they quit all but extremely essential driving.
I see at least three factors, all working together to cause this:
1. Extremely tight personal finances, virtually everywhere in the country.
2. Rising prices.
3. The increasing use of the internet, which eliminates quite a bit of the need for travel. We’re pretty much all connected, if we want to be, without leaving our front porch.
You certainly see a lot more of those mini cars like the Toyota Yaris. I suspect that downsizing has a lot to do with it.
Oh that is a fantasic and accurate tag line
BTW.. it did not inclusive (reasons of size) Because we are run by crap socialist economics.
Oh that is a fantastic and accurate tag line
BTW.. it did not inclusive (reasons of size) Because we are run by crap socialist economics.
If the US Fed keeps printing money, and since purchase of oil is done in dollars, more dollar printing, the higher the price of oil because it will take more devalued dollars to purchase one barrel of oil even in a depression when price of oil/gasoline should be dropping due to lower demand.
The influence on prices is not just demand right now. Ultimately, a lot people are going to get caught short, but right now things are upside down.
Similar situation in the corn market. Corn is to high to be used. So high Cargil and ADM are LAYING OFF (never happened in my memory). Livestock producers are cutting way back, because they can't afford the feed. Yet prices keep going up.
It isn't because of the end user demand.
Imagine what the price would be if we were in recovery.
Inflation is worse than we think.
The nice world-wide famine our fearless New World Order leaders have planned for us will get everybody's priorities back in line.
The ones who survive, that is.
Dont confuse people with the facts! ;-)
While there may be some overall decrease in supply, we’re exporting more gasoline than ever. The same drop in demand happened during and after the oil embargo in the 70’s.
I don't see nearly as many SUV's on the road and way more smaller cars/mid size.
Gas is getting near the magic $4.50 mark. At that point people start cutting back bigtime. It is just a step in the process of the price cycle. The cure for high prices is.......(wait for it)...... high prices. IMHO.
Just saying the average Joe and Sally Sixpack out there will see a 47% decline in consumption coupled with a 150% increase in the retail price, and will then begin entertaining every kind of conspiracy theory. They aren’t going to stop and put it to a macroeconomic analysis.
This morning UPS dropped off a nuclear/coal powered electric lawn mower. Next: Trade the van for a glowplug powered rollerskate.
I don't know if that is happening or not, but I suppose there must be some stats somewhere on fuel efficiency year on year.
Here’s a neat little site- US Inflation Calculator-
It says that inflation since 1987 has been 100%. You can plug in any years that you want.
My wife and I are trying to do our part !
We traded our Astro van, which she drove to work every day, for a Honda CR-V which gets twice the MPG of the Astro van.
I have recently bought a used, small, Honda Rebel 250 motorcycle, which gets around 70 MPG and can travel at highway speeds, for my local trips.
These changes plus the reduction of un-necessary travel have made a difference. I think other people are doing the same.
My wife and I are going to pick up our new car this weekend. The new car has an EPA rating of 40 mpg on highway , the old one was averaging about 20 mpg on highway. A rather large drop in our fuel consumption. I am sure many others are taking the same path as us. We just got tired of spending 80+ dollars a week in gas.
It is a Hyundai Elantra , built in Alabama.
Ironically, I went from my five minute walk to my office at T-mobile headquarters in Bellevue to my 48 mile drive to my job in Kentucky.
Everything else is so much cheaper, though, that gas could go to $10 a gallon and it would still be well worth it. That said, I suspect $10 gas would affect my life in other ways...
6.1% increase since Barry Hussein took over in 2009. (Thanks for link)
Wait until the March figures are calculated.
Out here in Californicator land, gas prices for regular are well over $4/gallon and up to or over $5/gallon.
In less than a year, filling up our gas tanks has gone from a little owie to big time hurt.
When people got their credit card bills for Dec/Jan and Feb, they started to cut down on their discretional/recreational driving.
We still see a lot of commute traffic during commute times, but traffic during the rest of the day is down with the exception of the times for dropping kids off at school or picking them up.
One of our younger Cali relatives’s wife has a good size suv, and she was a big time driver. Her gas bills were going over $400 per month. He took his credit card away from her and told her she had to fill her SUV on her credit card. She took the kids to school twice a week for a 3 mile round trip each day. Other Moms pick up or take the kids for the other days. Their grocery store is another 3 mile round trip. They get about 18 mpg with their suv. He started giving her what a gallon of gas cost for her cost to get to and from the school and a weekly trip to the store.
After she got her first on her own credit card bill for her driving, her gas costs are now down to about 50-60 $’s month.
I laughed out loud at this.
In 1997, I bought a Ryobi electric mower to do about one half acre of grass a week. Cost about $ 300.00. The mower lasted three years. First year, worked like a charm. The last year I had to recharge it four times to do the grass. Went back to a Sears gas mower for the next seven years. Sold the house amd moved into a community where my grass cutting was in the the monthly dues.Going into my 7th season of no grass cutting. I hope the batteries are better these days.
You will love the Elantra. It is a great care for the money, and very economical.
My daughter got a 2012 Elantra and we have a 2011 Sonata. We have had our Sonata one year and still love it. The styling is great,they are comfortable, sporty and responsive. Also highly rated by Consumers Reports.
Before then I had Chrysler minivans for 25 years.
I got news for you. With regards to oil and gasoline, supply and user demand fundamentals don't apply. In fact they haven't applied for at least the last 6 years. They have been trumped by big house investors who set price by the demand for paper title of of oil and products. Consumers are now irrevelent; if real demand for gasoline drops either refineries are closed or products exported. The consumer cannot win no matter what he does. He pays more if he uses more and he pays more if he uses less.
Oil is political....International Leaders use it and abuse it as political leverage...as well as it’s distribution.
“We have had our Sonata one year and still love it.”
Just bought my college age daughter a new 2012 Sonata. She love it. She drove the toyota Camry and Honda Accord and much preferred the Sonata over them. Got the 2.5. She was driving a 2004 VW Beetle prior to the Sonata. While the VW was a drove and rode ok it was expensive to maintain. I just got tired of dropping so much money keeping it up. So, no more VW products for me, ever.
We drove several vehicles and were ready to buy a Ford Focus , until we drove the Elantra. The Elantra is down on power to the Focus but the Elantra has way more leg room and feels much larger. I preferred the Focus styling but my wife wanted the Elantra, so that was that....
The Elantra was a few thousand dollars cheaper as well.
My better half drives an ‘85 toyota pick up she bought 20 years ago.
Full size bed in the back and gets 31 MPG.
Registration in Maine is based on original sticker price. Her tags are down to 25.oo per year.
That has never stopped my wife! 8-)