Thursday, June 26, 2008

More Demand Destruction

Another example of Demand Destruction due to high oil prices. A little dated perhaps, but I was at the beach all last week.

The latest “Traffic Volume Trends” report for April 2008 from the Federal Highway Administration (FHWA) shows that Americans drove 1.4 billion fewer highway miles in April 2008 compared to April 2007. The report said that vehicle miles traveled (VMT) on all public roads for April 2008 fell 1.8 percent as compared with April 2007 travel.

All regions fell, except for the Northeast. The Northeast has the lowest amount of driving, maybe due to the proliferation of mass transit in many of the urban areas, and the smaller amount of square miles in the region.

West - down 2.8%
North Central - down 2.1%
Northeast - Up 1.4%
South Gulf - down 1.5%
South Atlantic - down 2.6%

By State the biggest declines were:

Florida - down 3.5%.
Vermont - down 4.1%.
Minnesota - down 4.1%.
North Dakota - down 4.5%.
South Dakota - down 4.8%.
Idaho - down 5.3%.

So basically, Americans are driving the same amount of miles they drove in June 2005. It would seem that demand is elastic in the long term after all.

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