The Department of Energy’s Energy Information Administration (EIA) data on volume sales is over two months old when it released. The latest numbers through mid-September were released are now available. However, this report offers an interesting perspective on fascinating aspects of the US economy. Gasoline prices and increases in fuel efficiency are important factors, but there are also some significant demographic and cultural dynamics in this data series.
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 areupdated 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. The 12-month MA hit an interim high in November 2010, and then resumed contraction. The moving average for the latest month (September 2012) is about 7.3% below the pre-recession level and 4.2% off the November 2010 interim high. In fact, the latest data point is a level first achieved over fourteen years ago, in September 1998.
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, I was rather surprised by a Polk survey report that made the rounds back 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 are 6.7% 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 19.5% below the 1989 high.
What does this analysis suggest about the state of the economy? From an official standpoint, the Great Recession ended 39 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 attributable in large part to some powerful secular changes in US demographics and cultural in general:
- We have an aging population leaving the workforce, which we clearly see in the sustained contraction in the employment-population ratio.
- There is growing trend toward a portable workplace and the ability to work from home (I’m a typical example).
- Social media have provided powerful alternatives to face-to-face interaction requiring transportation (Internet apps, games, the ubiquitous cell phone for talk and texting).
- There has been general trend in young adults to drive less (related to points two and three above). See this PDF report for details.
We are indeed living in interesting times.
Images: Flickr (licence attribution)
About The Author
My original dshort.com website was launched in February 2005 using a domain name based on my real name, Doug Short. I’m a formerly retired first wave boomer with a Ph.D. in English from Duke. Now my website has been acquired byAdvisor Perspectives, where I have been appointed the Vice President of Research.
My first career was a faculty position at North Carolina State University, where I achieved the rank of Full Professor in 1983. During the early ’80s I got hooked on academic uses of microcomputers for research and instruction. In 1983, I co-directed the Sixth International Conference on Computers and the Humanities. An IBM executive who attended the conference made me a job offer I couldn’t refuse.
Thus began my new career as a Higher Education Consultant for IBM — an ambassador for Information Technology to major universities around the country. After 12 years with Big Blue, I grew tired of the constant travel and left for a series of IT management positions in the Research Triangle area of North Carolina. I concluded my IT career managing the group responsible for email and research databases at GlaxoSmithKline until my retirement in 2006.
Contrary to what many visitors assume based on my last name, I’m not a bearish short seller. It’s true that some of my content has been a bit pessimistic in recent years. But I believe this is a result of economic realities and not a personal bias. For the record, my efforts to educate others about bear markets date from November 2007, as this Motley Fool article attests.