Doug Short | Aug 23, 2015 01:41AM ET
The Department of Energy's Energy Information Administration (EIA) monthly data on volume sales is several weeks old when it released. The latest numbers, through mid-June, are now available. However, despite the lag, 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, we've added a 12-month moving average (MA) to give a clearer indication of the long-term trends. The latest 12-month MA is 6.4% below the all-time high set in August 2005 but off the -8.9% interim low set in August 2014.
The next chart includes an overlay of real monthly retail gasoline prices, all grades and formulations, adjusted for inflation using the Consumer Price Index (the red line). We've shortened the timeline to start with EIA price series, which dates from August 1990. 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 is 6.2% below the pre-recession level and 3.1% off the November 2010 interim high. For some historical context, the latest data point is a level first achieved in October 1998.
Some of the shrinkage in sales can be attributed to more fuel-efficient cars. But that presumably would be relatively small over shorter time frames and would be offset to some extent by population growth. For some specifics on fuel efficiency, see the FRED repository. What we see here is that gasoline sales on a per-capita basis are 7.7% lower than at the end of the Great Recession. The gallons-per-capita series includes the complete EIA data, but since we're using the 12-month MA, the blue 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 20.8% below the 1989 high but off the -22.2% interim low set in September 2014.
What does this analysis suggest about the state of the economy? From an official standpoint, the Great Recession ended 72 months before the most recent gasoline sales monthly data point. But if we want a simple confirmation that the economy has recovered to full growth, 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:
As we've continued to observe in this monthly update, we are living in interesting times
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