Traffic Volume Continues to Fall in August; What Will Happen in the Coming Months?

The Federal Highway Administration reported Thursday that travel during August 2008 on all roads and streets in the U.S. fell by -5.6% compared to August last year, the largest monthly decline since March of 1974 (-6.3%). August marks the tenth consecutive month of traffic volume decline compared to the same month in the previous year. Travel YTD through August 2008 fell by -3.3% compared to 2007.

The ten consecutive monthly declines (November 2007 through August 2008) in miles driven compared to the same month in the previous year is almost a record, and represents one of the most significant adjustments to driving behavior in recent history.

On a moving 12-month total basis, traffic volume in August fell to 4.5-year low of 2.929 trillion miles, the lowest level since March of 2004 (see chart above), and this measure has fallen in ten of the last 12 months.

Bottom Line: The moving 12-month total traffic volume in August 2008 (2.929 trillion) is below the August 2007 level (3.008 trillion) by 78.911 billion annual miles driven. At an average fuel efficiency of 20 m.p.g., and an average gas price of $3 per gallon over the last year, that reduction in miles driven represents almost a $12 billion annual savings for American consumers. That's in addition to the much larger $200 billion annual savings for consumers from the drop in gas prices from $4.12 per gallon to $2.71 since August (gas data), since consumers save about $1.42 billion annually for every penny decrease in gas prices.

It will be interesting to see how the significant fall in gas prices in September and October 2008 affects driving behavior, and we'll know in about a month from the next FHA report on September 2008 traffic volume.

Thanks to John Thacker for the FHA update.

Comments

[scfranklin94:]

Unfortunately most Americans don't think long-term; they'll probably go back out and buy SUVs....

2008 Oct 26 01:43 PM

[User 167260:]

I think the damage is done, The consumer was horribly raped at the pump and won't forget it, with everything going up, this savings doesn't even out. we still will be in the red for mere fact all the other things raised are not coming back down. The consumer is busted, and is bleeding, all wealth forms have been squeezed like a lemon, nothing left but the rind.

2008 Oct 26 03:55 PM

[Timothy Stolz:]

Thank you for the statistics as it gives us all cause to stop and think. Short of doing multiple surveys, all we can do is offer a conjecture on how drivers might respond.
There will be a certain percentage of drivers who have found alternative or public transportation to be of a benefit and they will no longer be counted in driving miles. Others will abandon their fuel saving "experiments in saving gas" and go back to their heavy footed driving habits. Those drivers that bought into the idea of $147 per barrel oil as the new world order now have nice new fuel efficient cars to drive which with cheaper gas prices will take even longer to pay for themselves.
The real question shall be "At what point will the volume of miles driven by new drivers cross the apex of miles saved by all of the methods so attributed to milage savings?" The answer to that question then becomes the level where the graph above begins to go up. The reduced milage from demand destruction may still be ongoing, as will the reduction from public transportation and other like methods; but the graph goes up as does the gross number of miles driven.
At any rate, I think we can count on the American consumer, or at least a sufficient number of them, to be predictable and return to their wasteful driving habits.

2008 Oct 26 07:12 PM

[Tony Petroski:]

Predicition: The lower cost of fuel will generate more travel on the highways. Meantime, the auto insurers should benefit. Why are some of them reporting quarterly losses?

2008 Oct 28 07:48 PM