Gasoline Alley

Never content with only a superficial grasp of the superficial, I have continued to delve into this fascinating question presented by the New America, namely, whether Americans are continuing to have fun fun fun now that Daddy took your T-Bird away.

I presume that we are. I found the discussion of daily gasoline usage (assuming that gasoline deliveries to gas stations are a close proxy for actual usage, which I assume they are, given the "just in time" nature of gasoline deliveries, as with most inventory in Consumer America) on the Depressoblogs a little confusing. Since the arguments found in such places as "Of Two Minds" and Mish's site tend to goal seek in their explications (most Depressoblogs fall all over themselves to make sure that things are portrayed as badly as humanly possible), you have to go to original sources to double check. You know, if you want credibility, always my watchword. Which takes one to the site maintained by the Energy Information Administration, and although this is a federal government site, I trust it because the Department of Energy is headed up by Steven Chu, a brilliant man with great ideas who unfortunately works for the Obama Administration, one of the dullest and least innovative presidencies in the history of the Republic. One of my very first blogs talked about Dr. Chu's overview lecture of the way forward in alternative energy, delivered at a China-America symposium at Wheeler Hall on the Berkeley campus in 2006. Switch grass, not corn, should be the basis of the ethanol fuel industry, and he laid it all out, taking into account all of the usual arguments about energy invested versus energy returned, etc., and pointing out that switch grass has the huge advantages of being a kind of hardy weed which replenishes the soil as it dies back and requiring far less in the way of (petroleum based) inputs. Plus, unlike corn, it does not divert the food supply, and it grows in places where you probably would not think to grow anything else.

So of course with the Obama Administration we have never heard anything much about switch grass or cellulosic production of ethanol. Steven Chu is a kind of Nobel prop to stand in the background while Obama thunders on about an "energy independent" America, presumably by fracking the hell out of Pennsylvania and drawing up all that natural gas trapped in shale rock.

A slight digression. What I have found in looking at the gasoline usage figures (http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mgfupus2&f=m) is that gasoline usage, indeed, is declining. Rather than cherry pick data as the Depressos do, it's probably more reasonable to use a high point in a high-driving month (I'm looking at August, 2006, the height of the bubble years) and compare it to August, 2011. Converting the barrel figures to gallons (42 gallons per barrel), what I see is that usage has declined over these five years from about 40 million gallons per day to about 37 million gallons per day, or about an 8% drop. The usage has continued to fall since August, 2011, but this definitely supports the idea that there is a trend toward lower gasoline consumption, if not as dramatic as that produced by cherry-picking starting and ending points. I'm not sure at all how the Depressos came up with 40%, unless you started with the highest use ever and compared it to a current reading from the dead of winter, which is not a realistic way to compute the difference, and it also suggests that fuel efficiency is playing a much bigger role than that portrayed by the Gloom & Doom Industry.

The Depressos (this would include Zerohedge and numerous other websites which rejoice in America's imminent collapse) are mainly interested in using these trendlines to counter any argument that America is making any progress whatsoever toward emerging from the current depression. While I tend to agree with these sites that America has not really gotten anywhere (in a real sense, as opposed to papering over a busted nation with various money-conjuration tricks), I do think that this tendency toward accelerating conservation, deliberate or not, is a damn good development in the larger scheme of things.

And the news that makes it all even better is that apparently the decline in gasoline usage is matched by similar declines in electricity, natural gas and fuel oil consumption. The electricity drop-off is no doubt partly attributable to decisions by Americans across the country, under heavy financial pressure, to discontinue cable TV and high-speed internet and various other electricity-sucking gizmos. Also, to turn off the lights when you're not in the room. Whatever, it's worth remembering that Americans have been wanton, unconscionable, egregious (I need one more adjective)...unconscionable (it was so good the first time) wasters of energy, at levels much higher than actually necessary to maintain our standard of living, such as it now is. We tend to use about twice as much energy per capita as a country such as Germany, and if you've spent any time there, I trust you would agree that the American standard of living is not twice as high. Maybe half as good, would be more accurate.

It's all a move in the right direction, if you ask me. Maybe the next step would involve a cessation of the endless purchasing of unnecessary junk, which I surmise has to do with an attempt to distract ourselves from the environmental wasteland we've created around us. The world looks so pretty in those glowing, hi-def pictures on your iPad, but it would be better yet if the world actually looked that way in an unmediated way. You know, in Reality.

Why have Americans stopped driving?

It's not really a complaint, mind you; if people want to get off the road, it's okay with me. It does raise two questions, however: (1) What the hell's going on?; and (2) Why is it that the lamestream media never so much as mention the phenomenon?

First, the facts. The chart at right was crunched together by Mike Shedlock at his "Mish" econoblog, and graphically describes gasoline usage over three-month periods (Nov-Dec-Jan) over a historical period, which provides some useful context. The same data have been discussed at length by Charles Hugh Smith at his "Of Two Minds" blog. Both arrive at essentially the same conclusion: American gasoline use has fallen off a table in recent months.

If you had no idea this was going on, you shouldn't blame yourself. As HUGE a data point as this represents, it does not fit well into the current, election-year-driven happy talk about the economy, nor does it comport with the massively-falsified labor statistics promulgated each month by the Illusionist-in-Chief herself, Hilda Solis of the Department of Labor. Propaganda sites such as the New York Times do not want to touch this, because it raises disturbing questions such as, how are Americans actually getting to all these new jobs the economy is creating? So if American gasoline usage has fallen over 40% in a very brief period, well, it must have something to do with the (very mild) weather that has plagued the United States of late.

The chart demonstrates that Americans are currently purchasing about 33 million gallons of gasoline per day (the chart, to smooth the data, provides a moving average for three-month totals of daily usage; thus, 110 million divided by 3). At the height of the housing bubble, daily gasoline usage was closer to 56 million gallons per day; thus, current usage is about 58% of the zenith of happy motoring, or at about the same level as ten years ago. This is yet another symbol of our Back to the Future Reality: most economic data points, such as the total number of jobs in the economy, or the inflation-adjusted level of average income, or the inflation-adjusted value of the major American stock markets, all seem to confirm the same picture. Absolutely nothing has happened in the last decade other than a growth in population and a continuing decline in our standard of living.

Why are Americans keeping their 254 million cars and trucks parked? One surmise, I suppose, is that Americans might simply be living in them but lack the bucks to actually operate them. It is not, by the way, a matter of fuel efficiency. Hybrid technology and a move toward more fuel -efficient cars account for about 6% of the decline over the last 10 years. So the data really do point toward a dramatic diminution in actual gasoline used.

The good news is that America probably has brought itself into compliance with the Kyoto Protocols on global warming, bringing to mind the old tri-partite saying about greatness, updated here for environmentalism: Some societies are born environmentalist, some achieve environmentalism, and some have environmentalism thrust upon them. The United States would appear to belong in this third category.

Realistically speaking, the sharp drop in usage must reflect an abandonment of a great deal of discretionary driving. The price of gasoline (and note its extreme inflexibility - where's the old "law of supply and demand?") creeps into the unconscious mind of a cash-strapped society and people just quit driving. I think about the cost of driving now in ways I did not before. Take, for example, a staple experience of my distant youth, the round-trip drive to L.A. One would drive to L.A. instead of flying because it was seen as a practically "free" way to travel. Now those 900 miles, calculated at 30 miles per gallon and $4.00 for each gallon (out here on the Best Coast), set you back 120 big ones. Or, simply a drive into San Francisco for the day. Our local governmental districts do not want to share in the general economic downtrend, and since they hold monopoly power over all the "infrastructure," they have jacked bridge tolls and municipal parking to the moon and beyond. It costs six bucks to cross the Golden Gate Bridge (discussions are underway to raise it to probably ten bucks) and it's difficult to find a downtown parking garage where you can leave your car for two or three hours for less than ten dollars more. So a simple drive to SF (about 1.3 gallons of gas for me) costs in the neighborhood of twenty to thirty bucks, if I use a car (the costs of buses and ferries, of course, are better than that, but those fares have also been ratcheted up in recent years - another example of a "non-shared" sacrifice enjoyed only by the civilian populace). And all of that is before the cost of whatever I had in mind as an activity in San Francisco. If I'm going out to dinner, obviously I'm over the hundred dollar mark at this point.

The bottom line is that it costs a lot to move around. If one is among the 47 million or so Americans on food stamps, or among the millions and millions of long-term unemployed, blowing a couple of hundred bucks on a long drive, or simply on a jaunt into the Big City for the day, can become an unaffordable luxury. I think this is what is really going on. An expense you can do without, you do without.

I also think this is part of a more general phenomenon in this country, the development of a kind of Human Dark Matter, an unseen cohort of people who have fallen off the grid and into an Underworld where they are not countable, where their economic activity cannot be measured because it doesn't show up in government numbers, or tax revenue figures, or in the official labor statistics. What you might call, increasingly, Real America. I'm working on a post called "Five Fractals In Search of A Macro-Iteration," a delightfully unpretentious title, don't you think? And the gasoline usage figures are part of that picture.

Updated: The graph, with its two-sided scale, is not altogether clear, so here are similar data in haec verba from the Of Two Minds blog:

"Deliveries steadily rose to a peak of 67.1 MGD [million gallons/day] in July 1998, declined marginally in the 2001-2 recession and then surged to 66.8 MGD in August 2003. If we just look at one month--say November--then we see that deliveries remained in a remarkably consistent channel from 1994 to 2008, between 54 MGD and 63 MGD, with the higher numbers occuring in the "peak bubble years" of 1998 and 2003.

"In 2010, gasoline deliveries declined to the low 40s--literally falling off the charts. In November 1983, deliveries were 51.1 MGD; in November 2010, they were 42.8 MGD, and in November 2011 they were 30.9 MGD."