I’ve been noticing something over the last month. I’ve been getting home from work in 40 to 45 minutes on a consistent basis. At first I thought it was just luck. But, it has become a consistent situation. There is clearly less traffic on the major highways leading to and from the City of Philadelphia. The post below confirms my suspicion. Gasoline usage has plunged in the last five weeks compared to prior years. This does not happen in when an economy is growing and employment is increasing. The government can’t fake these numbers. My conclusion is that there are more people not working and there is less commerce happening, so there are less cars and trucks on the roads. This is a sure sign we are in recession, despite the happy talk from the MSM.
So there are some benefits to our Greater Depresssion – my daily commute has improved. I’m always looking for a silver lining.
US Petroleum and Gasoline Usage Plunges Last 5 Weeks Compared to Prior Years
Here is a set of charts from reader Tim Wallace on Gasoline and Petroleum usage vs. the same five weeks in prior years. Explanations from Wallace follow each chart.
Petroleum Usage
Petroleum usage history for the past 6 years for this 5 week snapshot – you can see the drop from ’06 to ’07 was small but I caught that trend in Oct of ’07 and got out of the market.
My experience suggests that if petroleum does not grow at least 0.8% year on year the economy is headed recessionary. Notice the plunge of ’08 into the abyss of ’09.
We see a good improvement in 2010, not anywhere near the recovery we need as we were in an abyss, but it shows improvement. This year, we see another significant downturn, reflective of a stalled at-bet economy.
Gasoline Usage
Gasoline usage history shows a small rise in ’07, then a plunge in ’08. Usage level for the next two years was flat, followed by a huge plunge now. I did not expect this plunge because gasoline is a lot less volatile in my historical analysis than the overall distillates, some of which are weather related, such as heating oil.
It raises the question, why have people stopping driving, because that is what is happening.
Fuel Distillates Usage
The third chart shows the fuel distillates usage. This is the diesel, heating oil segment combined. Diesel makes up 17% of all petroleum and heating oil 3%. Much of the driver in the petroleum usage drop in ’08 and ’09 came from this segment of the economy. The current drop is due to a huge plunge in gasoline usage.
Percent Change from 2006 Baseline
The final chart shows the percentage changes in the past five years off the 2006 baseline. You can see gasoline at about 46% of distillates usage is the driver for the big drop in petroleum right now.
Cash-for-Clunkers Mileage Improvement Not the Explanation for Gasoline Plunge
Please see Crude Futures Have Risen Significantly, So Why are Gasoline Prices Relatively Low? for additional commentary and a rebuttal to the idea that improved mileage or cash-for-clunkers may have anything to do with the current decline in gasoline usage.
The best explanation for declining gasoline usage is that millions have dropped out of the labor force.
Quick Facts on Unemployment Rate
- In the last year, the civilian population rose by 1,726,000. Yet the labor force fell by 67,000. Those not in the labor force rose by 1,793,000.
- In November, those “Not in Labor Force” rose by a whopping 487,000. If you are not in the labor force, you are not counted as unemployed.
- Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.
Please see Charts of the Day: Labor Force and Unemployment Rate Adjusted for Population Growth Since 1948 Show Falling Unemployment Rate is “Statistical Mirage” for details and charts.
People have given up looking for work, entered forced retirement collecting social security, ran out of unemployment benefits, do more shopping online, or are simply too broke (or have less desire) to travel than before.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
a cruel accountant says:
I know several people who have found jobs near home and walk to work.
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9th December 2011 at 11:54 pm
Nonanonymous says:
It’s still a war of attrition, and the last nation standing wins.Yeah, our economy sucks, but it doesn’t suck as bad as most everywhere else.
Put another way, no matter how bad things get, we’re better off in the US than almost anywhere else in the world, until you consider the police state actions of the feds.
This doesn’t apply to the mega-rich, and doesn’t apply to total collapse, although the US is also more likely to recover more quickly than the rest of the world, or at least has the ability.
Also considering all of this could be avoided if not for the greed of those not making money fast enough, I’m not sure fourth turning theory explains it as well as the Book of Revelations..
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9th December 2011 at 6:32 am
Moekinz says:
Could it be people are going green and taking the train to center city? Why do you always have to be so pessimistic…it must be the mom in you!
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9th December 2011 at 7:13 am
DaveP says:
We’re not using as much gas. Since my wife totaled her 1999 RAV4 last April we’re down to one car. Actually got local gas at $2.95/gallon earlier this week.
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9th December 2011 at 9:09 am
Muck About says:
We’re paying $3.27 here in Central Florida. It’s impossible for a road user here to tell if there are fewer people on the road this time of year because our population close on to doubles between Thanksgiving and the first part of April.. All those snow birds. And it seems they can still afford to own two homes and travel South again this year.
Of course, probably 60% of the people here are collecting SS which, as long as it comes along the 3rd of every month, tends to smooth out the wrinkles of financial fortune. The other 40% of the people eat off those 60% receiving Feddy benefits.
We have one (count them – 1) interstate manufacturer here. Makes conveyor belt systems and escalators and sells them everywhere and is a great company with an excellent product. The rest of the economy is flipping burgers, consumption of one sort or another and service crap.
Other than a slight increase of petty crime, a few extra hoodlums commuting up from Orlando to rob a few banks and convenience stores, perhaps a bit longer lines at the charity food banks and
newspaper stories of kids having to live in cars (the sad song of the week), there is not a whole lot yet to point to Armageddon.
I suspect that will change with time.
MA
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9th December 2011 at 10:21 am
Anonymous says:
I read a story yesterday that said one third of people are already done Christmas shopping. I think the numbers are going to be abyssmal for Christmas sales.
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9th December 2011 at 11:11 am
TeresaE says:
“Gasoline usage has plunged in the last five weeks compared to prior years” – Admin
The accountant in me had guessed at this already. Crude is hovering in the upper $90s, yet the price at the pump – in Michigan, where taxes make up 20% of the cost – is less expensive than when crude was selling around $80. I paid less than $3.50 a gallon right before Thanksgiving, exactly when in a normal year the price shoots up thanks to vacations and holiday dinners with family.
What I want to understand is how in the HELL can we call a “recovery” when the we are still WAY below “normal”? I would love to see this 5 week snapshot going back to the 80s.
Just because the mega-corporations slaughtered American workers and took advantage of changes to the “look back” period for losses and got business gifted to them because the government stole it from the small businessman and were able to borrow money at 3% while the big banks revoked small business credit and closed companies across the country then the pharms and health insurance companies were gifted billions that somehow people with brains think we are recovering. We have just forced transfer from one to another, leaving less overall at the end.
My business is UP, up about 50% from when we were dead in the water when we were down 70%. Problem is we are still down, way down. I’ve evaluated our orders, customers and business. While I am happy we are “up,” I’m fearful because it doesn’t feel, nor look, like healthy business.
To my way of thinking, healthy business is business received because we provide a needed product, at a fair price in an arena of competition where many factories are using the end product to produce goods Americans buy.
Instead our business is evolving, we are getting lots of niche, special-made, short run items. If not for their higher profit margins, we would be in real trouble. Should be a great thing, except for reality. We are getting much of this business because our competition is gone and they are gone nationwide. We are also getting the biz because China doesn’t (yet) do the small runs. They are pros at the 500k production runs. And if you need 500,000, left-hand thread, 1/4 inch nuts, they are your guys, because with American wages, benefits, employee/ production/ environmental /zoning /lawsuits, we can’t compete with them on any level. Literally our steel costs more than they sell their finished products for. Try and win business with that model.
So, this “special-made” business is growing, but so is our overhead, as it means higher steel costs (fewer pounds), exotic steel costs, more man hours (bringing with it more taxes and workers comp), more tooling, more hours, more outside processors at mandatory minimums. As those costs continue to ever increase, it squeezes the profits and the specter of future “healthy” business.
Another portion of our sales is because our competition is fading. Guess that puts you back at the last man standing is the winner. Even if he is bleeding and going to die next. Scary. Our competition is fading because of the exact same issues we are battling. They finally lost, who is to say we won’t too? Plus, it surely feels like bad karma to profit from another’s demise. What goes around, comes around and all that crap.
And the third reason our business is “up” (but still down), is that due to head cuts everywhere, we are finding that our customers are having tougher times with their “just in time” systems. The Chinese importers, or mega-nationals, seem to be missing their delivery dates more frequently. So we are called to provide what we have in stock (we stock hundreds of thousands of nuts, bolts, pins, etc), immediately, and very expensively, for a customer used to buying by the crate, instead of the hundred that didn’t quite plan for contingencies and their parts are currently somewhere in the Pacific ocean.
To call this a recovery is insulting. We haven’t “recovered,” we have just figured out how to tread water. If there ends up being a buoy thrown to us, it will be great. If there is no lifeline, we will eventually be as screwed as our competitors. What a comeback.
This gas thing doesn’t lie, nor mislead. And to think that because 5% of the land mass is experiencing greater public transit is to miss the big picture as to what America is and the reality of the way millions live and work.
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9th December 2011 at 11:21 am
ron says:
Its the obammy plan to save mother earth by stopping all those polluting cars.
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9th December 2011 at 11:29 am
WestcliffeJeff says:
I’ve noticed this—big time—when I return to the Phoenix sprawlopolis for business or whatever. Traffic is slack compared to when I left there in 2007.
This might explain the slight droop in gasoline prices now even though oil hovers on the $100/barrel line. Less demand, more supply. Diesel, however, remains a bit more constant—perhaps mirroring similarly unchanged demand by freighters.
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9th December 2011 at 4:48 pm