Americans have been purchasing a lot more pickups, SUVs, and crossovers than small cars, hybrids, and electric vehicles - and this doesn’t appear to be changing anytime soon.
The traditional market dynamic for gasoline consumption and pump prices had for decades been based on the "cars vs. trucks” sales pattern in the U.S. and around the world. Lately, that’s gone askew with other market forces playing into the equation when looking at consumption trends from a broader perspective.
For the first half of this year, cars made for a little over 3.2 million in U.S. light-duty vehicle sales, while light trucks (pickups, SUVs, vans, and crossovers) made for more than 5.2 million new vehicles sold during that time period. Not that long ago, cars and trucks were at a 50/50 split in new vehicle sales.
Compared to the first half of 2016, cars are down more than 11 percent and light trucks are up 4.6 percent in new vehicle sales. Crossovers and large SUVs performed even better than pickups during that time.
That sales trend leaning toward light-duty truck segments started with the oil price plunge in July 2014. It continues to be supported by gasoline and diesel prices staying level in the market.
Gasoline and diesel prices fluctuate slightly with seasonal patterns playing their part, but oil analysts to stay around this level for the near future.
Federal fuel economy rules installed during the Obama administration played their part in the types of fuel efficient vehicles coming to market. But in recent years, the window sticker fuel economy rating has stayed flat at 25.1 mpg, according to Michael Sivak and Brandon Schoettle of the University of Michigan. Related: Electric Vehicles No Threat To Oil Prices Anytime Soon
According to economist Jill Mislinski, fuel consumption has increased recently by fuel prices staying even and light trucks being more popular than cars. However, when looking at the data on a per capita basis, fuel consumption is much lower than it was in 1990.
According to U.S. Bureau of Labor Statistics data used in averaging fuel consumption, gasoline use did decline after the fuel price spike of 2018 and then increased substantially with gas pump prices dropping in 2014.
Looking at in perspective of the consistently growing population in the U.S. over the past 30 years, per person fuel consumption is much lower now - 18.1 percent lower than the 1989 high.
Mislinksi points to a few market dynamics keeping fuel consumption lower than it was for the average consumer.
These factors include an aging U.S. population led by baby boomers and their parents, with more of them leaving the workforce and driving much less. There’s also been another workplace shift in recent years with technology providing the platform for a more portable workplace and more workers staying at home.
For younger Americans, a few market dynamics are showing a tendency to drive less and consume less fuel. Explosive growth in social media tied to mobile devices has taken away a good deal of face-to-face interaction. Playing team video games, texting, and talking can be done from a distance instantaneously. Related: Barclays: Oil Could Rise By $7 If U.S. Sanctions Venezuela
Young adults also tend to buy their cars later and drive fewer miles. They’re moving to cities all over the world and are using other transportation modes beyond personal vehicles much more than their parents did.
That’s the story behind explosive growth for Uber and Lyft, and moderate increases in membership in car sharing services like Zipcar, Car2Go, and Maven. They also like to take transit rides to work and are very interested in self-driving vehicles coming to market.
Urban population is growing rapidly and consistently around the world, led by the millennial generation in their 20s and 30s. Many of them don’t see the point of owning a vehicle, which will be stuck in heavy traffic and costing a good deal in car payments, maintenance, fuel, and parking. They’d rather have a few options in place such as shared rides and taking their bicycle to work rather than buying their first or second car.
By Jon LeSage for Oilprice.com
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