In the aftermarket, lots of parts and service sales depend on miles driven. Oil changes may be scheduled every six months or 6,000 miles, and spark plugs need replaced every 60,000 miles. The more you drive, the sooner you need this maintenance. Thus, the bounce back in Vehicle Miles Traveled (or VMT) in early 2022 was good news. It appeared that driving behavior had fully recovered from the lockdowns and work-from-home trends that had caused a falloff of traffic on the roads in 2020 and 2021. Unfortunately, that trend reversed in the spring. Miles driven in March, April, and May of 2022 were lower than for those same months in 2019 (Using 2019 as the last “normal” year before Covid).
The primary reason for the retreat on VMT is the price of gasoline. Gas prices rose steadily in 2021. However, it was the 2022 Russian invasion of Ukraine, and subsequent sanctions, which pushed gas prices high enough to affect driving behavior. Chart 1 shows average gas prices in the U..S from 2015 through Aug. 1 of this year. (All price data comes from the Energy Information Administration, or EIA, at the U.S. Department of Energy at https://www.eia.gov/dnav/pet/pet_pri_gnd_dcus_nus_m.htm.)
While prices fell since their peak in early June, they are still causing pain at the pump. Chart 2 shows the percentage increase in gasoline prices from 52 weeks earlier, with this chart starting at the beginning of 2020. The pain of high gas prices this summer may be magnified by the memory of how low prices were two years ago. Of course, prices were low two years ago because there was nowhere to drive during the lockdown, and Vehicle Miles Traveled plunged.
Location can magnify the pain at the pump. The Energy Information Administration also tracks prices regionally, as well as by selected states and cities. Chart 3 shows the regional difference in prices for the first week in August. The West Coast has the highest prices by far. Different state taxes cause some of these differences. Regional constraints in refinery capacity and pipelines also play a role in regional price differences.
Bruce Kratofil is the Audience Insights Manager at Babcox Media
Contact Bruce at [email protected]