Saturday, March 2, 2013
VMT and Gasoline Price Trend Update
Will this flat or declining VMT trend continue? It likely depends to a large degree on the price of gasoline, which in turn depends on the price of crude oil. Currently, U.S. oil production is surging because of the horizontal drilling and hydraulic fracturing that is unlocking tight oil from shales such as those in North Dakota and southwestern Texas. Will U.S. production grow enough to offset flat or declining oil production in the rest of the world? Time will tell. And perhaps some of us are finding ways to function well without so much driving, so the flat or declining VMT trend will continue regardless of the price of fuel.
A related issue is the Keystone XL pipeline. Some argue it should be approved because it will lead to lower gasoline prices. But, gasoline prices are linked to the world price of crude oil. The XL pipeline would allow the current moderate surfeit of crude oil that exists in the central U.S. to reach the world market. Unless the growing quantity of crude oil now being produced in the U.S., augmented by (carbon-intensive!) oil from the Canadian tar sands proves to be enough to lower world oil prices, the XL pipeline is unlikely to lower the price of crude or gasoline to U.S. consumers. It could lead to higher prices because with the pipeline in place the oil land-locked in the central U.S. could be sold for the higher world price.
Could it be that the high price of gasoline will gradually make driving less important in our way of life? Could we become increasingly efficient in moving goods, information, and ourselves in ways that don't require so many vehicle miles traveled? Perhaps, at least to a slight degree, this is already starting to happen, and some carbon can stay in the ground.