Lower gas prices have become maybe the top economics story of the moment. But while we cheer the cheaper driving, there's another trend to cheer: the growing economy just doesn't need gasoline quite like it once did.
Total miles driven per dollar of GDP have fallen off dramatically in the last 20 years. The number of gallons of gas consumed per dollar of GDP has been falling for even longer. That's according to a new report from Michael Sivak, a research professor at the University of Michigan's Transportation Research Institute.
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Source: Michael Sivak
Lots of factors contribute to this. The declining number of gallons consumed is in part a function of more efficient cars. And more public transit ridership has probably also helped to keep the number of miles driven in check. The recession may have also caused people to cut back on their driving.
But part of what's happening is that economic health has grown increasingly decoupled from how much we drive. Sivak points out that not only has everyday driving fallen off, but truck-driving's contribution to GDP has also declined. Meanwhile, areas of the economy that are not transportation-intensive — internet publishing and data processing, for example — have seen explosive growth. Likewise, e-commerce has grown while shopping at actual, physical stores has been flat.
It's not that low gas prices aren't great for some people's personal finances — as the Wall Street Journal's Nick Timiraos writes, lower prices "could be a particularly progressive tax cut because lower-income households are particularly sensitive to increases in energy prices." So low prices could create an economic boost in the sense of boosting some consumer spending and maybe even driving. But economic growth and driving aren't as tightly linked as they once were.
