Gasoline prices have hit new (nominal) highs. The impact on driving and the economy depends in part on the intensity of gasoline and diesel use.
Source: EIA, FRED, accessed 24 February 2022.
The fuel economy of conventional cars has been improving over time, as has the advent of electric vehicles. What does this mean for the ratio of vehicle miles traveled (VMT) to fuel used (actually supplied)?
figure 1: Ratio of vehicle mileage to fuel use, 000 miles per barrel (black). Fuel is gasoline plus 1.3xbarrel diesel per barrel. Log-linear trends (red), all on a log scale. Recession dates as defined by NBER are shaded from peak to trough in gray. resource: point/FHA by Fred, EIANBER, and the authors’ calculations.
By the end of 2021, the ratio of miles driven to fuel use was about 6.5% higher than in January 2000. (Obviously, this number does not control for vehicle types, and how intensively these different types of vehicles are used).
The underlying data series looks like this:
figure 2: Ratio of vehicle mileage to fuel use, million miles (black, left log scale). Supply gasoline, 000 barrels (blue, right logarithmic scale), supply diesel, 000 barrels (cyan, right logarithmic scale). Recession dates as defined by NBER are shaded from peak to trough in gray. resource: point/FHA by Fred, EIANational Bureau of Economic Research.
BTW: While nominal gasoline prices are at record highs, the real gasoline price component of the CPI is not.
image 3: Ratio of CPI gasoline composition to core CPI (blue, log scale). Recession dates as defined by NBER are shaded from peak to trough in gray. Source: BLS via FRED, NBER and author’s calculations.
The share of gasoline and other fuels in personal consumption expenditures is higher than in recent times (chart below, to Q4 2021), but much lower than in 2012-13.
Figure 4: Share of gasoline and other energy commodities (dark blue) in personal consumption expenditures. Recession dates as defined by NBER are shaded from peak to trough in gray. The red dashed line for the first quarter of 2000 (start of the example in Figure 1-3). Source: BEA, NBER and author’s calculations.
