As gas prices rise, will VMT fall?
March 21st, 2010Gasoline prices are up, approaching $3/gal. across the U.S. and getting close to being a dollar more per gallon than a year ago.
Bill McBride at Calculated Risk has posted a chart showing the relationship between gas prices and vehicle miles traveled (VMT).
McBride explains:
Although vehicle miles driven are noisy month to month, it appears that miles driven responds to spikes in oil prices.
For the last few weeks, oil prices have been bouncing around $80/barrel, a price level last seen just before oil prices spiked in 2008. Will we once again begin to see demand destruction and a collapse in VMT, such as we saw in 2008?
For December 2009 – the last month of data – the DOT reported that miles driven were unchanged compared to December 2008 after increasing in 5 of the 6 previous months. The report for January should be out this next week. Should be interesting.