Surge In Gasoline Demand Last Summer Indicates Americans Are Driving More; DOT Says Record Was Likely Set In 2015; Data At End Of Year Suggests Trend Reversed -- January 28, 2016

With regard to the energy industry, I thought the information released yesterday was more confusing than usual. This particular story is an example of the confusion, but it''s in the Wall Street Journal so I'm sure I'm wrong and they are correct.

But here's the headline and the story: American drivers are back on the road in record-setting fashion.

An expanding economy and dramatically cheaper gas prices have lured Americans back onto the roads, where they’re racking up record mileage.

U.S. vehicle-miles traveled surged 4.3% in November 2015 compared with November 2014, the largest increase since 1999, according to the Transportation Department.

That put 2015 on pace to become the most heavily traveled year in history.

In the 12 months leading up to November, drivers covered 3.14 trillion miles, up 3.6% from the same period in 2014, the highest year-over-year increase since 1997, according to the department.

For decades, the number of miles driven reliably increased every year as a growing population and greater access to cars pushed more people on the roads. That changed in 2008, as the recession took hold. Overall vehicle-miles traveled dropped in 2008 and 2009 and struggled to rebound.

But a labor market that added roughly 221,000 jobs a month last year and gas prices that skirted the $2-per-gallon mark have all but ensured that 2015 will set a new high point.

And more at the link.

Now going through the story:

• the EIA data clearly shows that gasoline demand and diesel demand began dropping precipitously at the end of the driving season, year over year (2015 over 2014) -- I've posted the EIA charts and it's very, very obvious
• because gasoline is so inexpensive, automobile sales are doing very well, and gas-guzzling vehicles (SUVs and pick-up trucks) are doing particularly well -- again, the monthly figures are routinely reported on the blog
• with increased sales in gas guzzling vehicles and decreased gasoline demand and decreased diesel demand this past autumn, it's hard to buy into DOT telling us 2015 was on pace to become the most heavily traveled year in history
• the article noted the economy was expanding -- wow, that's seeing things through rose-colored glasses; if the economy is expanding, it's not by much, and certainly everyone agrees that the recovery has been one of the weakest ever
• adding 221,000 jobs/month was seen as a positive but in fact the jobs market appeared pretty lackluster; it was in the eyes of the beholder to determine whether 221,000 additional jobs/month was fair, good, or great

The article then ends with this paragraph which only adds to the confusion (personal doubt) about the DOT numbers:

The uptick in driving comes at a time when fewer young people are getting driver’s licenses even as the share of older people with a license is rising. While it’s possible those younger people could eventually start driving as they age, it could be that driving may be about to lose its allure among younger generations.

What that paragraph had to do with the rest of the story, I have no idea. 

I think the entire article is apocryphal. It seems obvious that with gasoline and diesel so inexpensive, Americans would be driving more, but gasoline demand year-over-year this past autumn certainly suggests the trend is reversing.

The huge surge in gas demand we had last summer is more than offsetting what we saw in the last two months of the year.  That supports the DOT's estimate that 2015 will set a US driving record. The surge was huge last summer; but it dropped off in a precipitous manner at the end of the summer driving season. Gasoline demand at the end of 2015 and gasoline demand in January 2016 remains lower than one year earlier which for me is a huge red flag with regard to the economy.