Change in Vehicle-Miles Traveled in the United States and Nominal Spot Oil Prices, 1971-2019

Change in Vehicle-Miles Traveled in the United States and Nominal Spot Oil Prices, 1971-2019

Sources: Federal Reserve Bank of St. Louis & US Department of Transportation, Federal Highway Administration.

There is a relationship between energy prices and changes in travel demand, as evidenced by the United States. When oil prices rise sharply growth rates in vehicle-miles traveled (VMT) plummet, which is also linked with a concomitant recession. It is only during an oil shock (1973, 1979-80 and 2008) that changes in VMT went negative. Counter shocks (a significant drop in oil prices) tend to have limited impacts on mobility trends, implying that a sharp drop in oil prices does not boost vehicular travel in a significant manner; it simply reduces their operating costs.

Another important trend has been the declining annual growth rates of VMT in time, with average figures of 4% in the 1980s, 3% in the 1990s and a convergence towards zero in the first decade of the 21st century. This is partially linked with a maturity of the diffusion of the automobile, compounded by lower levels of economic growth. It could be argued that peak mobility in the use of the automobile may be on the horizon. Still, a sharp drop in oil prices in 2015 was associated with vehicle-miles growth rates around 2%. It is unclear if a shift towards hybrid or electric vehicles will undermine the long term relationship between petroleum prices and mobility.