Tuesday, May 17, 2011
VMT Trend Flat - the End of an Era?
Vehicle miles traveled (VMT) are strongly linked to the American way of life, and correlated with economic activity. From the 1930s until recently, with a few interruptions, VMT in the U.S. have grown consistently.
But around 2005, well before the recent economic downturn, an inflection point in the long-term trend appears to have occurred. Since then, the VMT trend has essentially been flat. This is a change of potentially historic proportions.
The 2005 growth cessation coincided with the price of gasoline rising above $2.50 per gallon. As the chart below shows, there have been only two other periods since the 30s when the real price of gasoline rose above $2.50 per gallon, the World War II era and the mid-70s through the early 80s. These periods also saw flat or declining VMT.
The current period of flat VMT is the longest since WW II, when gasoline was rationed. With gasoline prices again nearing $4.00 per gallon, it is unlikely that VMT will increase in 2011. It would not be a surprise if prices increase, and if a decline in VMT sets in. We may be witnessing the end of an era.