Vehicle Miles Traveled Hits Record; Fuel Efficiency Decreasing Too

Low-priced oil played a major role in Royal Dutch Shell's decision in September to terminate Arctic oil exploration, their decision last month to end a huge oil sands development in Alberta, as well as being cited by President Obama on Friday as one reason to reject Transcanada Corp.'s application to build the 1,179-mile pipeline Keystone XL pipeline from Alberta to Nebraska:

"The pipeline would not lower gas prices for American consumers," stated the president. "The national average gas price is down about 77 cents over a year ago.  It’s down a dollar over two years ago." [See related post].

However, low oil prices are producing opposing consequences on the consumption side by increasing demand for oil. Americans are driving more miles in less fuel-efficient vehicles and taking transit less often. AASHTO Journal reports on the latest federal mileage data, and they are cause to make OPEC cheer.

The Federal Highway Administration said its latest monthly "Traffic Volume Trends" report showed vehicle traffic on U.S. roadways reached 277.3 billion miles in August, a 2.3 percent gain from a year earlier and the most for any August on record.

That continues a trend of vehicles miles traveled growing on a year-over-year basis for 18 consecutive months and puts 2015 VMT on a pace to be the highest ever. The estimates include passenger vehicle, bus and truck travel.

While FHWA doesn't mention the correlation with low gas prices, Gas Buddy.com states it explicitly in their June 25 article: "A low fuel price environment clearly has jumpstarted new travel."

As for fuel efficiency, Dr. Michael Sivak, transportation researcher for University of Michigan Transportation Research Institute, has been reporting monthly on the fuel efficiency of vehicles purchased by consumers since 2007. Gas prices peaked in July 2014. The correlation is clear. From his Nov. 5 report:

The average fuel economy (window-sticker value) of new vehicles sold in the U.S. in October was 25.0 mpg—down 0.2mpg from September.  This decline likely reflects the decreased price of gasoline in October, and the consequent increased sales of pickup trucks and SUVs. [Emphasis added]. 

Fuel economy is down 0.8 mpg from the peak reached in August 2014, but still up 4.9 mpg since October 2007 (the first month of our monitoring).

[Monthly updates found UMTRI Sustainable Worldwide Transportation]

The current oil market works against oil production that has high costs, but it is also increasing consumption. If "America is now a global leader when it comes to taking serious action to fight climate change," as President Obama proclaimed on Friday, he needs to recognize that notwithstanding increased fuel efficiency standards, low oil prices work against meeting his climate goals.