It’s proof that the global car fleet’s shift to electric drivetrains is happening faster than some of the more optimistic mainstream predictions. Gasoline sales, which consume about a quarter of the world’s oil, have already peaked, according to the International Energy Agency. Those for road fuel in general – which includes a roughly similar volume of diesel, used mainly in trucks, motorcycles and three-wheelers, as well as a significant share of European cars – are expected, according to many analysts, to reach their maximum before the end of this period. decade.
Even so, with new car sales adding only around 5% to the global fleet of around 1.5 billion cars each year, the most important factor behind this change will for some time be the sharp increase in l conventional energy efficiency achieved over the past 15 years. The average pickup truck sold in the United States currently gets more miles per gallon than the average sedan sold in 2014, and the average sedan gets almost twice as far as it did in 2010. These standards aren’t just a rich-country luxury: they are reproduced from the United States and Europe to China and India.
Most of these efficiency criteria were introduced about ten years ago following the oil price spike in 2008, which means that they will increasingly reduce consumption in the coming years. come, as older, more gas-guzzling vehicles are being scrapped. the end of a typical life of 12 years. The upshot is that even if people in low-income countries buy their first scooter and then move on to heavier and larger vehicles, falling road fuel consumption in rich countries will drive down total demand for crude.
There is just one problem with this image. What if, instead of encouraging people to use less gas, fuel efficiency simply encourages them to drive more?
We have seen this scenario play out before. As U.S. gasoline prices soared in 2008, traffic — measured by vehicle miles traveled, or VMT — plummeted. The initial weakness was not so surprising in a measure often seen as an indicator of economic growth. His persistence, however, was shocking. The seasonally adjusted measure did not rise above its January 2006 level until nearly nine years later, in December 2014.
This protracted crisis broke an “iron law” of 20th-century transportation, wrote Stephen Dubner of Freakonomics fame at the time. Not a shy man to offer hypotheses to explain human behavior, he declared himself perplexed. Maybe it was the cost of fuel, or government policy, or congestion, or millennials moving downtown, or the growth of women in the workforce, or a saturated auto market? Or maybe we all just reached a point where we had no free minutes in the day to drive?
Steven Polzin, a transportation expert at the University of South Florida, concluded that there had been a “critical moment” and that VMT would never grow again as it had in the past.
The next change in the data was even less expected. After nearly a decade of slump, TMV started to rise again in 2015 at about the same rate as in the early 2000s. Only the Covid-19 pandemic and its aftermath managed to stem it.
The best explanation for this is probably that fuel efficiency and the fall in oil prices in 2014 helped make driving cheaper than it ever was. As anyone who’s watched a car commercial would recognize, people would much rather drive for fun than for work, shopping or picking up the kids from football. European data seems to confirm this, with rich countries taking more leisure trips, while people in poor countries drive mainly for work.
It’s a strangely disturbing prospect. If the 2006-2015 peak in US VMT was an illusion – as it now clearly seems to have been – then perhaps the most recent downturn is another. The UK data, which has followed the same pattern of decline and recovery as the US, certainly points to energy efficiency cannibalizing itself as the best explanation.
Eventually, the rapid adoption of electric vehicles will decouple VMT from oil demand. The post-Covid decline in labor force participation, which means fewer people driving to work, is another headwind, according to energy analyst Philip Verleger. Still, we shouldn’t ignore the risk that an increase in 2015-style driving once the current era of $4-a-gallon gas is over could give oil one last boost. That’s especially likely if those miles are driven in pickup trucks and SUVs, whose growing popularity also likely owes a lot to falling running costs as their efficiency improves.
The world can ill afford such a change, at a time when it absolutely must begin to control the approximately 12% of emissions from road transport. Hopefully Dubner’s last guess was right and this time around there just isn’t enough road space or hours in the day to drive any further. We’ve been car addicts since the days of Henry Ford. Breaking the addiction can be harder than we hope.
More from Bloomberg Opinion:
• San Francisco’s empty train cars create problems for public transport: Justin Fox
Peak oil has finally arrived. No, really: David Fickling
Gas at $3 a gallon isn’t as painful as it used to be: Liam Denning
(1) This category includes battery electric vehicles, plug-in hybrid vehicles and fuel cell vehicles. The majority are battery electric.
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
David Fickling is a Bloomberg Opinion columnist covering energy and commodities. Previously, he worked for Bloomberg News, the Wall Street Journal and the Financial Times.
More stories like this are available at bloomberg.com/opinion