Oil may be nearing top as gasoline needs to account for demographics

Getting Closer to the Top

“The Millennial generation is leading the change in transportation trends. 16 to 34-year-olds drove a whopping 23% fewer miles on average in 2009 than in 2001— the greatest decline in driving of any age group. In addition, Millennial's are more likely to want to live in urban and walkable neighborhoods and are more open to non-driving forms of transportation than the older generation of Americans.”

The report finds that under any reasonable scenario, the number of miles driven annually will be far fewer in the future than if the Baby Boom trends had continued. During the second half of the twentieth century, low gas prices, rapid suburbanization, and an ever-increasing number of women commuters entering the workforce fueled the Driving Boom. The factors that defined that period have since taken a back seat. Under some conservative scenarios outlined by the report, driving won't ever regain its 2007 peak during the range of the study, which extends to 2040.

Yet, government forecasts of future vehicle travel continue to assume steady increases in driving, despite the changing trends seen over the past decade. Those forecasts are used to justify spending vast sums on new and expanded highways, even as repairs to existing roads and bridges remain neglected, and even as public transit systems with growing ridership face cutbacks. "America's transportation leaders need to wake up to the momentous changes that have taken place over the last decade," said Baxandall. "The infrastructure we build today will mainly be used and paid for by the Millennials who are leading the trend away from driving." The report examines a number of high-profile official transportation forecasts and finds a consistent pattern of overestimating how much Americans will drive. The official forecasts examined all fall above even the most conservative scenarios forecast in the report and all seem to be based on the assumption that the ongoing driving growth of the Driving Boom will last forever. The change in driving trends will have huge implications for many aspects of Americans' travel life:

Coupled with improvements in fuel efficiency, reduced driving means Americans will use about half as much gasoline and other fuels in 2040 than they use today, making the real value of gas taxes fall as much as 74%. Gas taxes provide the chief source of federal transportation funds and a major source for many states. 

Traffic congestion will be less of a problem.

  • Toll roads will be less financially viable.
  • Many highway expansion projects will start to look like wasteful boondoggles.
  • Forms of travel that are expanding in use, like public transit, will be a better investment.

And to add my 2 cents we will see electric and natural gas cars that will further reduce the demand for gasoline. Millennials staying closer to home will chose electric and nat gas autos when they become more available.

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About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.


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