SEPTEMBER 28, 2011

44 MONTHS

 

VMT chart by CALCULATED RISK from govt. numbers.

In the US Vehicle Miles Traveled has been below its previous peak for 44 months, a startling break from the familiar pattern of the past sixty or seventy years. Notice the previous sharp break after the Iranian Revolution. And look what happened then of course, the epic ramp upward -- when the price of oil fell to about an order of magnitude lower than it's been recently. There was cheap abundant oil to finance that post-shock ramp. The massive off-shore deposits that were discovered in the 1960s and tapped in the 1970s and 1980s have now been substantially consumed and depleted, and have not been replaced by similar free-flowing deposits. Instead, the oil that used to flow from Prudhoe Bay, the North Sea and Cantarell has been replaced with even more difficult, deeper, more expensive sources, and with tar sands that have a marginal cost of production around $80 per-barrel. The Saudis who flooded the oil market compliantly according to American wishes in the 1980s now seem unwilling or unable to do so. Plus (or should I say minus) producers like the Saudis are using more and more of their own oil, leaving fewer barrels available for export to net importers like the US.

So, don't bet on another epic ramp upward. America with its relatvely stable population has likely reached Peak Demand for oil and therefore energy, and probably Peak Driving. In other words, the economy as we knew it, which was so intelligently based on infinite supplies of nearly free crude from the Middle East, is done.

Some factors weighing on VMT: Unemployment, high fuel prices, food inflation which leaves less money for driving and going out, economic uncertainty, economic meltdown, tele-commuting, internet shopping, cultural sea-change, growing awareness and popularity of bicycling for transportation ...

Additional Hurst energy propaganda: THE RESERVES MYTH 1 , 2 , DRILLING FOR DIMWITS , THE REFINERIES MYTH , A QUESTION FOR PRIUS OWNERS , THOMAS L. FRIEDMAN IS UNSUSTAINABLE , more in the ARCHIVES.