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-February, were published on Monday. However, despite the lag, this report offers an interesting perspective on fascinating aspects of the U.S. 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 latest 12-month MA is 8.2% below the all-time high set in August 2005. We are fractionally above the interim low of 8.3% below the high set two months ago in the December report.
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. The 12-month MA hit an interim high in November 2010, and then resumed contraction. The moving average for the latest month (February 2013) is about 7.9% below the pre-recession level and 4.8% off the November 2010 interim high. For some historical context, the latest data point is a level first achieved over fourteen years ago, in June 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 continue to recommend a reading of the Polk survey report that made the rounds in April of last year.
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 7.2% 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 20.5% below the 1989 high -- a new low.
What does this analysis suggest about the state of the economy? From an official standpoint, the Great Recession ended 45 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 continue 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 U.S. 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 has provided powerful alternatives to face-to-face interaction requiring transportation (Internet apps, games, the ubiquitous cell phone for talk and texting).
- There has been a general trend in young adults to drive less (related to points two and three above). See this PDF report for details.
- The U.S. is experiencing accelerating urban population growth, which reduces the per-capita dependence on gasoline.
We are indeed living in interesting times.