Eight months of driving less.

[SirNitram]

Link

American Driving Reaches Eighth Month of Steady Decline
Trend Signals Urgent Need for New Highway Financing, Officials Say

WASHINGTON – New data released today by the U.S. Department of Transportation show that, since last November, Americans have driven 53.2 billion miles less than they did over the same period a year earlier – topping the 1970s’ total decline of 49.3 billion miles.

“We can’t afford to continue pinning our transportation network’s future to the gas tax,” said U.S. Transportation Secretary Mary E. Peters. “Advances in higher fuel-efficiency vehicles and alternative fuels are making the gas tax an even less sustainable support for funding roads, bridges and transit systems.”

Americans drove 4.7 percent less, or 12.2 billion miles fewer, in June 2008 than June 2007. The decline is most evident in rural travel, which has fallen by 4 percent – compared to the 1.2 percent decline in urban miles traveled – since the trend began last November.

Last month, Secretary Peters unveiled the USDOT’s transportation reform plan which offers lawmakers several options to consider when Congress takes up highway and transit legislation next year. “It really makes little sense to try to upgrade our infrastructure using a revenue source as ineffective, unsustainable and unpopular as the fuel tax,” she added.

“Secretary Peters’ plan to overhaul our nation’s transportation investment strategy begins the much-needed transition away from status quo solutions that produce status quo results. Her plan strengthens the abilities of state and local officials to integrate effective transit and highway solutions to meet Americans’ ever-changing travel demands,” said Acting Federal Highway Administrator Jim Ray.

As Americans drive fewer miles, less revenue is generated for the Highway Trust Fund from gasoline and diesel sales – 18.4 cents per gallon and 24.4 cents per gallon, respectively. During the first quarter of 2008, motorists consumed nearly 400 million fewer gallons of gasoline, or about 1.3 percent less than during the same period in 2007, and 7 percent less – or 318 million gallons – of diesel.

The Federal Highway Administration (FHWA) collects vehicle-miles-traveled data for all motor vehicles through more than 4,000 automatic traffic recorders operated round-the-clock by state highway agencies. To review the FHWA’s “Traffic Volume Trends” reports, including that of June 2008, visit http://www.fhwa.dot.gov/ohim/tvtw/tvtpage.htm.

Energy Information Administration reports an average drop of 900,000 bbl/day over the Jan-May period in petroleum consumption. June and July it shifted to 400k less.

[White Haven]

Er...check me on this...but isn't a decrease in miles driven going to show up in a decrease in degradation of road conditions due to lack of wear? The fuel efficiency/gas tax maintenance argument is sensible enough, but that's the only part that does.

[Admiral Valdemar]

The price is still holding around $115/bbl. right now, but that's chiefly because China has cut right back on how much it uses for the Olympics right now. There are indications they will ramp up usage as soon as the games are over and add that premium back on to the price.

Additionally, unleaded inventories are looking shaky.

[Gerald Tarrant]

The price is still holding around $115/bbl. right now, but that's chiefly because China has cut right back on how much it uses for the Olympics right now. There are indications they will ramp up usage as soon as the games are over and add that premium back on to the price.

I disagree; the method china used to cut down gas usage was to allow prices to rise to market level. It probably would have saved the gov't some grief to leave those low until the Olympics. The fact that they didn't suggests they really couldn't.

From the McClatchy Editor in China, Link

Ordinarily, an increase in the price of gasoline would not be news. But in China, it is. Gas and diesel prices went up 18 percent overnight. Here’s why that’s important.

China sets domestic energy prices. Gas, diesel, jet fuel and electricity are all carefully controlled.

The last time Beijing allowed gas prices to rise was in November. Since then, crude oil prices on the world market have climbed about 40 percent. Until earlier this week, Chinese consumers were paying about $2.60 per gallon for 90 octane gasoline, while consumers in the U.S. have been paying upwards of $4.00 a gallon.

Every time I filled up the office car, I’d think: Thank you, China! You’ve just given me a rebate of $1.40 a gallon. Merry Christmas to you, too!

Obviously, that subsidy was unsustainable. The two major oil refiners that retail gasoline could not continue losing tens of millions of dollars.

The prevailing thinking, though, was that Beijing would bite the bullet and not raise gas prices till after the Olympic Games in August, desiring complete social stability before and during the Games. Also, it put off action in order not to aggravate rising inflation.

That thinking was wrong.

The price increase shows that other important factors came into play. Around Asia, other nations were pushing up subsidized prices, including India, Indonesia and Malaysia. China was coming under criticism that its artificially low prices were stimulating demand, forcing prices up further.

That is why oil markets plunged $4 or so with China’s announcement.

Also, shortages of gas were breaking out in southern China, a sign that refiners and retailers are weary of selling at a loss.

An analyst appearing now on CCTV 9, Tang Min of the China Development Research Foundation, is saying that he expects a second price hike soon and that the two hikes will stimulate the refiners to bring more gas to the market.

“If the companies lose less money, the more incentive to produce more,” Tang just said.

Social stability is still a major concern, of course. Another headline this morning notes the continuing drop in Shanghai stock market, which is affecting tens of millions of small investors. The main index plunged 6.5 percent yesterday, dropping to 2,748, less than half of what it was last Oct. 16 when it hit a record 6,124.

The big question is what impact the hikes will have on inflation. The Consumer Price Index fell to 7.7 percent year-on-year in May, a dip from April’s 8.5 percent, giving officials breathing room to act. But could inflation soon hit double digits?

I think it already has. We went to a neighborhood restaurant last night, and I’m convinced the prices were at least 20 to 30 percent higher than the last time I was there a couple of months ago.

[Natorgator]

At the very least, it's encouraging that gasoline consumption isn't completely inelastic and that people are cutting back in the face of high prices.

[Admiral Valdemar]

China has reduced imports drastically lately for the first time in years, and there have been other restrictions on oil being bought lately, along with the anti-smog campaign in Beijing and elsewhere.

That China has increased prices isn't that important, because the Chinese economy has only been hitting limiting factors with respect to product supplied, not costs. They have a good trillion dollars in FOREX to deal with any oil price hikes, hence the run up over the last year and their increased economic activity despite recession looming in other nations.

[Gerald Tarrant]

Short term it is very inelastic. Most of the things which influence fuel usage are hard to change quickly. The distance of commute for instance can be changed by moving, changing jobs, or telecommuting, none of which can be changed quickly. A car is a big ticket purchase, so getting better fuel efficiency takes time. Mass transit can't change overnight, even more bus routes and more buses on the routes takes time. About the only quick change is car-pooling.

[Gerald Tarrant]

That China has increased prices isn't that important, because the Chinese economy has only been hitting limiting factors with respect to product supplied, not costs. They have a good trillion dollars in FOREX to deal with any oil price hikes, hence the run up over the last year and their increased economic activity despite recession looming in other nations.

? In the US we've just witnessed the delayed effect of a price hike on personal and business consumption. The Foreign Exchange reserves are irrelevant to this discussion if the gov't continues to pass on the price to consumers. Are you seriously arguing that the same behavior won't manifest among Chinese consumers?

[Admiral Valdemar]

? In the US we've just witnessed the delayed effect of a price hike on personal and business consumption. The Foreign Exchange reserves are irrelevant to this discussion if the gov't continues to pass on the price to consumers. Are you seriously arguing that the same behavior won't manifest among Chinese consumers?

No, I'm saying that the Chinese can survive far more than the US can because they don't have a colossal deficit on their shoulders. The Chinese can afford to carry on with their business longer than the US could due to the way they've handled their economy, which even during the biggest price increases in oil and other resources the world has ever seen, still outgrew any OECD nation. Eventually, they will suffer because of lack of sales to the US as they downturn ever more, but right now, the price hikes are down to the Chinese and rest of Asia being able to outbid the weaker US for products to refine.

This demand destruction here hasn't been seen in China at all, and nor will it so long as their economy has customers elsewhere to sell to. It will really be bad stuff for the US when it starts affecting Chinese growth to any significant extent, possibly in 2009-2010.

[Sea Skimmer]

Er...check me on this...but isn't a decrease in miles driven going to show up in a decrease in degradation of road conditions due to lack of wear? The fuel efficiency/gas tax maintenance argument is sensible enough, but that's the only part that does.

In theory that’s true, but in practice it doesn’t work out; roads and bridges suffer degradation from a lot more then just traffic, frost heaving and the weather in general being very major factors. Most of the loss in miles traveled is in cars and light trucks too, which guzzle fuel and thus generate lots of taxes, but which do not cause nearly as much road damage as heavy trucks do. Now combined this with the fact that the US was under funding its road network even before gas tax revenue dropped and we have a serious problem.

[Androsphinx]

Let's hope that this mood lasts long enough for a substantial number of people to make long-term fuel-consumption choices (like new cars and homes close to work), rather than just short-term fudges.

[Phantasee]

I can tell you right now that your car, your neighbour's car, and your mom's car don't do anywhere near the same amount of damage to the road in months as my truck does in one day. Loaded, I'm pulling 40 metric tons over the road. The ramp speeds you see posted might seem really slow for your car, but in a loaded semi, it's just enough to keep you steady on the road. Most of the road infrastructure isn't built for car traffic, it's for truck traffic.