AP reports the typical American household will have spent a record $4,155 on automobile fuel this year – 8.4% of what the median family takes in, the highest share since 1981.

Don’t expect 2012 to be any better. More likely, fuel will be getting even more expensive.

Brent crude will average near $111/barrel for 2011, even more than in 2008 when oil prices hit a peak of $147.50/barrel. Some analysts think oil prices will average a bit less in 2012, perhaps averaging $105/barrel. Others analysts predict that oil prices will be even higher than in 2011, projecting WTI (which have consistently been significantly lower than Brent this year) to average $100 per barrel next year, eclipsing 2011′s average of about $95/barrel. Oil-price.net projects WTI prices to be at $112 a year from now.

Nobody is expecting oil prices to drop, or at least not much. Here’s a big reason why: Saudi Arabia, the world’s lowest-cost producer, requires a price of $91/barrel just to break even.

The glory days of cheap gas are over for good. Our memories aren’t playing tricks: remember gas wars, gas at 19.9 cents a gallon? In my Fiat 850 Spyder – $2000 new, right off the lot, and 50 mpg – driving seemed virtually free. We were young and immortal, oil was infinite, and the world was empty and ours for the taking. There were no bounds, no limits. Vietnam and then the first gas crisis in 1973 were the first intimations that the imperial project – to stride over not just the nations of the world, but over Nature herself – was destined to go awry.

A few were prescient. Limits to Growth was published in 1972, foreseeing humanity bumping up against constraints to both sources and sinks by the first decades of this century. Way back in ’56, Shell geologist M. King Hubbard predicted that U.S. oil production would peak in 1970 – a prediction that proved spot on.

Porter Stansbury at The Daily Reckoning posts this chart showing “real wealth” per capita in the U.S. since the mid-’50s.

Note that “real wealth” in the U.S. peaked about the same time as U.S. oil production. Coincidence?

Stansbury measures “real wealth” using a standard commodity index (the CRB) up to 1975 and gold post-1975 (when gold began to trade freely). When peak oil arrived in the U.S., Nixon took the U.S. off the gold standard. With the U.S. kissy-face with the Saudis, the dollar became the petrodollar.

I’m not sure I would put a lot of faith into this measure of “real wealth” – but the correlation of peak wealth with peak oil is provocative. There’s no question that the U.S., indeed the entirety of Earth, has become a poorer, more degraded home for humans since 1970, despite decades of “growth” and “progress”. That degradation doesn’t even begin to show up in our accounts.

Around 1970, reality arose and smacked us across the face.  Humanity has been working through the range of responses – denial, anger, bargaining, depression, not yet acceptance – ever since.

2011 will see the annual average price of crude oil the highest in history. Brent is expected to average about $111 for the year at the end of 2011, well above its previous high of about $97 in 2008. Despite record high oil prices, global oil supplies are defying standard economic theory and stubbornly refusing to grow.

The chart above, posted by Stuart Staniford at Early Warning, shows production of crude plus condensate has been basically flat since 2005. The meager increase over the last seven years in total liquids is largely coming from increases in NGPLs (hydrocarbons larger than methane removed from the natural gas stream), “other liquids” (biofuels, coal-to-liquids, gas-to-liquids, etc), and “refinery processing gains” (volume gains which occur in the refinery as heavier oils are cracked to lighter fuel products).

One economic consequence of stubbornly high oil prices in the U.S. is that people are driving less and less. Petroleum (gasoline and diesel fuel) consumption is well off peak 2007 levels, as seen in this chart posted by Mish Shedlock.

Vehicle miles traveled (VMT) in the U.S. has been in a down trend now for almost four years – an unprecedented occurrence.

Mish offers an explanation of what’s happening:

The best explanation for declining gasoline usage is that millions have dropped out of the labor force.

* * *

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.

Don’t expect the economic exhaustion that is a consequence of peak oil to end any time soon. John Michael Greer this week warns that already, the future can’t pay its bills.

Over the last decade . . . crude oil prices have more than tripled; over the last decade, behind a froth of speculative booms and busts, the world’s industrial economies have lurched deeper into depression. Peak oil researchers have pointed out for years that the former trend would bring about the latter, but long after events proved them right, the connection still remains unnoticed by most people.

Given the reality of a collapsing economic superstructure, a quite rational response is to begin to ease your way out and re-engage in the household economy, where wealth is unreported and untaxed and cannot be siphoned off.

The Federal Highway Administration reports travel on all roads and streets was down 1.5% for September 2011 as compared with September 2010. Cumulative travel for 2011 is down 1.3% from 2010.

Bill McBride at Calculated Risk has this chart showing VMT back to 1971.

McBride observes the current downward trend in VMT is unprecedented:

In the early ’80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Currently miles driven has been below the previous peak for 46 months – so this is a new record for longest period below the previous peak – and still counting!

September VMT was below last year’s numbers for the seventh straight month.

In Oregon, vehicle miles traveled (VMT) was down 0.7% in September 2011 compared to September 2010. Cumulative VMT is now down 2.0% from 2010. VMT in Oregon has been down every month in 2011 compared to 2010.

Indications are VMT in the U.S. continued to fall in October and November. Platts reports U.S. retail gasoline demand fell 4.5% year-on-year for the week ending November 18; the four-week rolling average was down 3.8% from the same period last year. The average retail price of a gallon of regular gasoline was 18.1% higher than last year.

Falling VMT in the U.S. should not be a surprise. Driving is dependent upon the availability liquid fuels. Jean Laherrère reports global all liquids production has been on a bumpy plateau since 2005 around 87 Mb/d, with a variation of 2 Mb/d (which is equal to the accuracy of the data, about the difference between EIA, IEA or OPEC values). He has posted an updated graph of historic and projected production at The Oil Drum.

Laherrère expects this plateau to continue for a few years before a significant decline takes place. But recall, peak oil is not synchronous: the peak in oil consumption arrives earlier in some countries than in others. In the U.S., the peak oil consumption is clearly in our rear view mirror. That peak oil is manifested in declining VMT should be expected.

Auto sales came in at an annual rate of 13.26 million in October – slightly below forecasts of 3.4 million. Calculated Risk posts this chart.

Automakers are now on pace to sell about 12.8 million vehicles for in 2011, up from 11.6 million last year.

Light vehicle sales are still poking along at levels typical of three, four, even five decades ago, and last seen two decades ago, as apparent in this chart, again from Calculated Risk.

In 1991, the population of the U.S. was 50+ million less than it is today – and there were 35 million fewer licensed drivers, as seen by comparing statistics here and here.

Auto sales have been on a downward trend for a decade now. Oil consumption in the U.S. has been on a downward trend since 2005.

The above graph, posted by Stuart Staniford at Early Warning, shows the EIA’s data since 2000 – both the weekly and the monthly series.  According to Staniford, the monthly series is believed to be more accurate, but the weekly series is more up to date. The weekly data is certainly noisier.

The downward trend in auto sales and oil consumption is consistent with the continuing downward trend in vehicle miles traveled (VMT). VMT in the U.S. reached a peak in January 2008 and has been trending downward now for almost four years.

The Federal Highway Administration reports travel on U.S. roads and streets was down 1.7% for August 2011 as compared with August 2010. Cumulative travel for 2011 was down 1.3% from 2010.

Bill McBride at Calculated Risk posts this chart.

McBride observes the downward trend in VMT is unprecedented:

In the early ’80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Currently miles driven has been below the previous peak for 45 months – so this is a new record for longest period below the previous peak – and still counting!

In Oregon, vehicle miles traveled (VMT) was down 1.0% in August from August 2010. Cumulative VMT is now down 2.2% from 2010.

There are some indications that travel may have picked up a bit in September. After falling a revised 0.5% in August 2011, the American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 1.6% in September.

However, the long-term trend in truck tonnage remains down from peak 2005 levels.

Also, the American Petroleum Institute reports total petroleum deliveries (a measure of demand) totaled 19.9 million bpd, an increase of 2.5% in September over September 2010.  While motor gasoline demand was up only slightly by 0.3%, distillate demand reached a record for the month.  On a year-to-date basis, gasoline demand was down 1.3% from 2010.

Shell CEO Peter Voser is warning that over time oil supply and demand fundamentals are going to tighten significantly:

Oil output from fields in production declines by 5 per cent a year as reserves are depleted, so the world needed to add the equivalent of four Saudi Arabias or 10 North Seas over the next 10 years just to keep supply level, even before much of an increase in demand.

So how have we been doing at discovering new reserves? Not nearly good enough.

All the easy stuff has been found. We basically stopped finding conventional super-giant high production rate oil fields forty years ago.

Despite the best technology and soaring prices, each year the amount of new oil reserves discovered is a fraction of that found in the 1960s. Oil production flattened in 2004. In 2010 consumption exceeded production by over 5m barrels per day for the first year ever.

In the charts above, a large part of the difference between consumption and production is accounted for by such things as biofuels, oil made from coal and other non-conventional sources, which are not included in the production figures. The rest of the difference is from the running down of world oil stocks.

The questions now facing us are how long can global oil production be held on its plateau, and how fast will the subsequent decline be?

The stall in global oil production in the face of strong demand from less developed countries is having a profound consequence: while the Chindia  (China & India) region, and many other developing countries, have been able to increase their net oil imports, most developed oil importing countries, such as the U.S., are being forced, via price rationing, to take a declining share of a falling volume of Global Net Exports.

In the U.S., oil consumption has fallen by 10% since peaking in 2005. Less oil consumption translates into fewer car sales . . .

. . . and less driving.

Vehicle miles traveled (VMT) in the U.S. plateaued in 2005 and have been trending down ever since.

Oregon is no exception to the national trend. Vehicle registrations in Oregon peaked in 2007 . . .

. . .  and were down to 3.23 million in 2010.

Gasoline consumption in Oregon and Washington has been on a plateau since 1999.

Sightline reports VMT in Oregon and Washington have been on a gently declining plateau since 2002.

The trend should now be clear, in Oregon as well as the nation as a whole. The times of ever-growing traffic on our roads are over for good. Instead, our future holds declining fuel consumption, declining number of cars and trucks, and declining vehicle miles traveled.

It’s time to start planning for that, rather than for continued growth.

The Federal Highway Administration reports travel on all U.S. roads and streets was down 2.5% for July 2011 compared to July 2010. Cumulative travel for 2011 is down 1.2%.

Bill McBride at Calculated Risk observes the downward trend in VMT is unprecedented.

In the early ’80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Currently miles driven has been below the previous peak for 44 months – so this is a new record for longest period below the previous peak – and still counting!

Gas prices are down from highs reached in spring this year, but are still significantly higher than a year ago – as seen in this chart made available by GasBuddy.

Crude oil prices have declined from highs reached earlier this year, but are still high enough to stifle economic growth (Bloomberg: as of 99/27/2011, WTI was trading at $84.45, Brent at $108.95). Gasoline prices appear to have room to decline, too. Crude oil accounts for about 55% of the price of gasoline. The chart shows WTI prices; however, gasoline prices in the U.S. are impacted more by Brent prices. While WTI briefly exceeded $112/barrel in April, Brent briefly broke above $127/barrel. WTI has become disconnected from global markets and the WTI/Brent spread has exploded, as seen in this chart from Bloomberg.

The American Trucking Association reports truck tonnage is down, too.

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index declined 0.2% in August after falling a revised 0.8% in July 2011. July’s decrease was less than the 1.3% ATA reported on August 23, 2011.  The latest drop put the SA index at 114.4 (2000=100) in August, down from the July level of 114.6.

This chart posted at Calculated Risk shows that freight tonnage has been on a downtrend since peaking in early 2005.

ATA Chief Economist Bob Costello observes while freight tonnage is down, carriers handling as much freight as they can – because trucking industry capacity has fallen.

“In part, this is due to less industry supply.  The number of trucks operated by the truckload industry is still down about 12% from the height in late 2006, yet tonnage levels are about the same as in late 2006. Additionally, most carriers are finding it very difficult to hire new truck drivers, which mean they can’t add too many trucks.”

VMT in Oregon was down 2.1% in July 2011 from July 2010, and is now down 2.4% for the year.

What if the recent down trend in vehicle miles traveled is not a fluke, but rather the manifestation of a new reality brought about by peak oil and its resultant economic impacts? Oregon’s planning assumes continued growth. Travel demand forecasting is driven by population and employment forecasts, assuming a positive correlation (if not a causal relationship) between population and employment growth and growth in travel demand. If that assumption is no longer valid, we will be wasting billions of precious dollars on unneeded highway white elephants, such as the Columbia River Crossing (or, in Evan Manvel’s words, the extremely risky and costly CRC highway mega-project).

Light vehicle sales were at a 12.12 million SAAR in August, up 5.3% from August 2010 and down <1% from the July 2011 sales rate of 12.2 million.

The above chart, posted by Bill McBride at Calculated Risk, shows car sales poking along at levels typical of three, four, even five decades ago, and last seen two decades ago. In 1991, the population of the U.S. was 50+ million less than it is today – and there were 35 million fewer licensed drivers, as seen by comparing statistics here and here.

Globally, 35 million new vehicles were registered last year. So even with the collapse in U.S. auto sales, the U.S. still accounts for over a third of the global market. And with 240,000,000 light vehicles on the road, the U.S. maintains almost one-quarter of the global light vehicle fleet. Tom Whipple at the Falls Church News-Press points out that in the U.S there is now a motor vehicle for every 1.3 people and at least one for every licensed driver. But in an era of little or no economic growth, limited employment opportunities and rising energy costs, it is highly unlikely that there will be anything approaching 240 million registered vehicles in the U.S. 25 years from now.

Last month, Wards Auto published a story pointing out that the world’s motor vehicle count for the first time exceeded one billion – which explains why global oil prices remain extraordinarily high even while economies continue to struggle. Brent crude is trading at almost $116/barrel ($115.80 as of 9/7/2011), and is trading at a near record premium of $25.70 to WTI crude at ~$90/barrel ($90.10 as of 9/7/2011).

The Federal Highway Administration reports travel on all roads and streets was down 1.4% for June 2011 as compared with June 2010. Cumulative Travel for 2011 was down 1.1%.

Bill McBride at Calculated Risk observes the dip in U.S. vehicle miles traveled (VMT) is unprecedented:

In the early ’80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months. Currently miles driven has been below the previous peak for 43 months – so this is a new record for longest period below the previous peak – and still counting!

VMT in Oregon was off 1.4% from June 2010, and is now off 2.3% for the year. The drop in driving is continuing into August: the New York Times reports the four-week moving average in gasoline consumption is down 3.8 percent from last year.

While light vehicle sales in the U.S. almost surely have seen their peak, and VMT may have seen its peak, that’s not true for the globe as a whole. The auto trade journal Ward’s reports the number of cars and trucks on roads around the world has for the first time exceeded one billion, as global registrations jumped from 980 million units in 2009 to 1.015 billion in 2010. Registrations in China exploded in 2010 by 27.5% to more than 78 million vehicles. China now has the world’s second-largest vehicle population (after the U.S., with 239.8 million units), pushing it ahead of Japan, with 73.9 million units, for the first time. India’s vehicle population underwent the second-largest growth rate, up 8.9% to 20.8 million units. Brazil experienced the second largest volume increase after China, with 2.5 million additional vehicle registrations in 2010.

While the market in the world’s developed countries is pretty saturated, that’s not true in the world as a whole. In the U.S., the vehicle-to-person ratio was 1:1.3 among a population of almost 310 million. Italy was second with 1:1.45. France, Japan, and the U.K. followed, all of which fell in the 1:1.7 range. In China, the ratio was 1:17.2 among the country’s more than 1.3 billion people. India, the world’s second most-populous nation with 1.17 billion people, saw a ratio of 1:56.3.

With growing demand from non-OECD countries, it should not be surprising that global oil prices remain stubbornly high. As Stuart Staniford has pointed out at Early Warning, peak oil is not synchronous: the peak in oil consumption arrives earlier in some countries than in others. In the U.S., the peak oil consumption is clearly in our rear view mirror.

In many non-OECD countries, oil consumption is still growing, while global crude production has peaked and all-liquids production is struggling. The consequence: falling demand in OECD countries no longer suffices to bring global oil prices down to a point where economic activity can return to normal. Rather, the reality of multiple, endemic economic crises erupting and festering around the globe has become the new norm.

U.S. light vehicle sales were at a 12.23 million SAAR (seasonally adjusted annual rate) in July, according to an estimate from Autodata Corp. – up 6.1% from July 2010, and up 6.2% from the June 2011 sales rate.

The July sales rate trails the 12.5 million pace set in the first half of 2011. U.S. passenger vehicle sales totaled ~11.5 million in 2010 – the second-worst year in almost three decades. Sales in 2009 totaled ~10.4 million.

U.S. light vehicle sales remain at levels last seen about 20 years ago, as seen in this chart posted at Calculated Risk.

In 1991, the population of the U.S. was 50+ million less than it is today – and there were 35 million fewer licensed drivers, as seen by comparing statistics here and here.

Experian Automotive reports that the number of new cars and light trucks on U.S. roads in the last half of 2010 was about equal to the number of older cars disappearing, as the number of light vehicles scrapped (~5.7 million) – equaled the number of new vehicle registrations (also ~5.7 million). In the fourth quarter of 2010, the annual scrappage rate was 5.3 percent for cars and 3.5 percent for light trucks. There are about 137,080,000 cars and about 101,235,000 light trucks registered in the U.S. (BTS data as of 2008 – the most recent data available). So 7,265,240 cars and 3,543,225 light trucks are now being scrapped each year, for a total of 10,808,465 vehicles – which yields an overall scrappage rate of 4.5%. (Note: Experian Automotive estimates that as of the end of 2010 there were ~239,812,000 cars, trucks and crossovers in use in the United States -or 1,497,000 more than the BTS estimate of 238,315,000 for 2008).

Experian Automotive notes that Q4 scrappage rates in Q4 2010 were substantially higher than Q3 rates – the scrappage rate for cars was up 28.3%, and the scrappage rate for light trucks more than doubled, up 58.2%. The scrappage rate in the U.S. is volatile and has been trending down over the last 40 years – but 4.5% is abnormally low and is unlikely to be sustained for long.

At the rate of 6.1% which has been the average over recent years, about 14.5 million vehicles would be disappearing from U.S. roads each year.

The U.S. will never see auto sales return to the average annual sales of 16.8 million vehicles seen in the period 2000 – 2007. High unemployment means that fewer people are in a position to buy a new car. And, as Tom Whipple points out at Falls Church News Press, high fuel prices – a symptom of peak oil – are sucking hundreds of billions of dollars out of peoples’ pockets, and the life out of our economy.