by Bill McBride on 2/19/2010 02:28:00 PM
Friday, February 19, 2010
In early 2008 there was sharp drop in U.S. vehicle miles driven. That was one of the key signs of demand destruction for oil that led me to predict oil prices would decline sharply in the 2nd half of 2008.
With oil prices at $77 per barrel, I've started looking for possible signs of demand destruction again (see: Oil Prices Push Above $81 per Barrel).
The Department of Transportation (DOT) reports that vehicle miles driven in December were unchanged from December 2008:
Travel on all roads and streets changed by 0.0% (-0.1 billion vehicle miles) for December 2009 as compared with December 2008. ... Cumulative Travel for 2009 changed by +0.2% (6.6 billion vehicle miles).Click on graph for larger image in new window.
This graph shows the comparison of month to the same month in the previous year as reported by the DOT.
As the DOT noted, miles driven in Dovember 2009 were unchanged compared to December 2008, and miles driven have declined 1.0% compared to December 2007 - and are down 3.2% compared to December 2006. This is a multi-year decline.
So far there is no evidence of significant demand destruction for oil, however the lack of growth in miles driven is suggesting a sluggish recovery.