Demand destruction?

Interesting story on ABC news from 8/1 about driving habits talks about the concept of demand destruction and energy demand. I’m not sure what to think about this. I mean I do really like the prospect that energy habits would truly be changing in the US, and I do realize we have driven several billion less miles in the last few months, but I still don’t think it will be a significant, lasting change. Btw, the billions less driving miles is a bit of a statistical trick. According to the FHA, we drove 250.2 billion miles in June 08 a decrease of 4.7% from June 2007 (11.76 bill less). There were 251 million passenger vehicles in 2006, so if we assume no growth in number of vehicles up to now, that means that in June 2008, each driver (technically vehicle) was responsible for driving 47 less miles than they did last year. It sure looks better in the news to report a ’12 billion mile decrease’ doesn’t it? Stupid news. The cumulative decrease in miles per vehicle for all of 2008 up to June compared to 2007 is only 160 miles btw, so we are not changing as much as the new would have you believe.

Here in Illinois I do indeed see many more people riding bicycles, and scooters (I see lots of those ‘new’ license plates). There are noticeablely more people on the bus than last year, and school has not even started back up. But there is another trend that worries me. The car dealerships are having such a hard time moving their stock, they are making drastic offers for large SUV. I have seen quite a few new ful sized SUVs as well. People can’t resist a good deal I guess. And I don’t blame them. I mean the deals are so good, that you would probably break even on the gas price differential over the first year, maybe even two. Given this, I am not so sure the concept of ‘demand destruction’ will hold true, at least for US energy consumption.

On another related note, I had a road rage incident yesterday. I have been in the field all week, and I drove yesterday in order to pick up some equipment. When I got back from the field, it was about time for Jordan to get off, so I went to pick her up. We were on our way home when we came to a 4-way stop on campus that is notoriously slow due to mass pedestrian movements. I was second in line to make a right turn. The car in front went. The car waiting on the left went as I pulled up, then it was my right of way, so I started into the intersection. All the sudden the car to my left guns it, honks, and the driver is literally screaming at the top of her lungs, “It is MY TURN, your cutting me off a$$hole!” among other niceties. I was already half way through the turn and for safety sake muscled the rest of the way in. Then I gladly went exactly the speed limit 25 🙂 We got the the next light, where I was turning left, she went straight. Which was long enough for her to honk again, pull up along side us, and continue to yell niceties at me. She was SO upset that I ‘took’ her turn through the intersection. I mean you should have seen her face. She was 1-2 bpm from having a massive aneurysm!

Jordan and I were not angry or riled up by this woman’s outburst, but I can almost guarantee she is probably still steaming about it this morning. yeesh. Really people, can’t we just get along? Wow.

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5 responses to “Demand destruction?

  1. No, no we can’t.

  2. Thanks for your explanation of how it was determined that we are driving billions less miles. I was wondering how that number was reached. It sounds far more impressive than the 1% decline I heard previously.

    It seems to me the current attempt at selling over-sized vehicles is working. This area of San Antonio used to be Hummer City, with a regular parade of them whenever we went out. During the past year, they disappeared. I mean totally! I was humming, “Where have all the Hummers gone?” Then, in the past month, droves of them have returned. I guess boys and girls who couldn’t affort them the first time ’round are finding their dreams come true. I hope they have done the calculations on how long the savings last with these gas prices.

  3. A couple of things to consider about the number of vehicles, and how much of a decrease in miles each was driven. You state there were 261 million vehicles in 2006, and you’re basing your figures on that number. Many of those vehicles are a second vehicle in the family that might not be driven that often. And so, the reduction has to be accounted for by the cars actually driven on a daily basis. My pickup is a case in point. I have two vehicles, but only drive one of them on a daily basis. I have cut down on the miles I drive the Buick by more than 47 miles a year.
    Second, that 11.76 bil. miles less adds up to a lot of gasoline. Let’s take 20 mpg as a figure to work with, or 588 M gallons. 588M times $140 equals $61.15 billion fewer dollars going to the Arabs. To be honest, if I rmember right, we don’t get that high of a percentage of our oil from Arab countries, but it does go out of our borders to other countries.
    Or is your point the CO2 emissions? The reduction in miles driven, and the increase in mpg in newer cars means we’re putting less CO2 in the air per mile, but don’t worry, China and India are making up for it by selling more autos in their countries. They’ve been doing the bicycle thing for all their history, and now they want what we got.
    Frustrating, isn’t it?
    It’s not frustrating to me, because, as you know, I don’t think man is responsible for global warming. I don’t think the CO2 we put in the air has any significant impact on the total amount present.

  4. Holy CRAP! Gasoline costs $140 per gallon where you live?

  5. Glad you caught that Nyet. I forgot to convert gallons to barrels before I gave the final tally. Obviously, it makes a big difference. Instead of 61 billion, it rounds out to 2 billion dollars. Thanks.

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