As Gas Prices Drop, VMT Rises

Sightline's Clark Williams-Derry looks at low gas prices, a down economy, and vehicle-miles-traveled, noting that the precipitous declines in VMT have halted, and suspects it may plateau.

1 minute read

February 27, 2009, 9:00 AM PST

By Irvin Dawid


"As (Bloomberg News) notes, gasoline consumption fell in December 2008, compared with the previous December. But looking at the numbers, the year-over-year decline was actually the smallest since the previous February -- suggesting, perhaps, that low prices are beginning to subtly boost driving.

The nationwide decrease in (December, 2008) in year-over-year travel registered at only about 1.2 percent -- a significant cut, but nothing like what we saw earlier in the year, when year-over-year declines reached as high as 5.6 percent.

We'll keep our eyes on the numbers. I'm betting that, if gas prices stay low, we may see a pause in the decline in vehicle travel."

From WSJ: Gas Demand Edges Higher, Lifting Crude :
"Months after soaring fuel prices spurred U.S. drivers to cut back on their driving, demand for gasoline is slowly coming back, helping to push up depressed oil prices.

Oil prices have fallen over the past few months as demand slowed much faster than supply spigots could be closed off. Now this trend seems to be receding. Still, economists aren't predicting another rapid run-up in oil or gasoline prices.

"A return to $4 a gallon is probably not something we're going to see anytime soon," said one energy analyst.

Thanks to Steetsblog Daily, 2/24/09

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