Trucks Don't Raise Gas Prices
The O Pine




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© 2001 Brian F. Schreurs
Even we have a disclaimer.

Anteaters are nature's suction pumps.
As gasoline prices continue to rise at the pump, many somewhat hysterical but well-meaning people are putting the blame squarely on the shoulders of trucks, especially sport-utility vehicles, as if they're some new phenomenon that only popped up in the last couple of years. Well folks, the truck boom has been going steady for over a decade now. In 1980, trucks made up 16% of new vehicle sales; in 1990, trucks were 30% of new vehicle sales; and in 2000, trucks were 46% of new vehicle sales. [1] This actually makes it pretty easy to determine whether truck sales are affecting the price of gasoline, since there is plenty of history to use for a statistical analysis.

Short version for those with short attention spans:

There is no direct correlation between trucks and gas prices. Get over it.

Long version for those who take an interest:

The basic goal of this analysis is to establish a correlation between trucks and gas prices. The reason trucks might influence gas prices is because their fuel economy is worse than that of cars. Therefore, it stands to reason that measuring the fuel economy of trucks against gas prices is a good starting point.

However, it is absurd to suggest that only gasoline consumed by trucks would affect the overall pump price. Therefore, the yardstick that matters is the overall fuel economy across the entire fleet of operable cars. If trucks are the scourge as claimed, then their greater numbers will surely be reflected in the overall fleet fuel economy.

Unfortunately, it is not reasonable to study the entire fleet of operational vehicles due to the difficulty of obtaining reliable data earlier than 1975. This makes it nearly impossible to estimate the fuel economy for the population of functional cars older than 1975. Therefore, the fleet fuel economy for each year is restricted to that portion of the fleet less than 15 years old, which represents 87% of the vehicles on the road. For example, the fleet fuel economy for 1989 includes all vehicles from 1975 to 1989, and the fleet fuel economy for 1999 includes all vehicles from 1985 to 1999.

The fuel economy for each model year is derived from that year's new-car average economy in the Environmental Protection Agency's 55/45 test. [2] To determine any given year's overall fleet fuel economy, each model year's new-car average is weighted according to the percentage of that year's vehicles remaining on the road. The percentage of older vehicles remaining on the road is derived from energy use data provided by the Department of Energy. [3]

Gasoline pump prices are national averages of all grades as reported by the Department of Energy. [4] 1996 dollar corrections are likewise from the DOE. The 2000 gas price average was provided by the American Automobile Association [5] and corrected to 1996 dollars by calculation.

This table illustrates the model year fuel economy; the calculated overall fleet fuel economy; the actual annual national average pump prices for gasoline; and the pump prices in 1996 dollars (add 9% to arrive at 2000 dollars).

Year

New Fleet MPG

Overall Fleet MPG

Average Pump Prices

Prices in 1996 Dollars

1975

15.3

0.57

1.42

1976

16.7

0.59

1.40

1977

17.7

0.62

1.38

1978

18.6

0.65

1.35

1979

18.7

0.88

1.69

1980

22.5

1.22

2.14

1981

24.1

1.35

2.17

1982

24.7

1.28

1.93

1983

24.6

1.23

1.78

1984

24.6

1.20

1.68

1985

25.0

1.20

1.62

1986

25.7

0.93

1.24

1987

25.9

0.96

1.23

1988

25.9

0.96

1.20

1989

25.4

23.5

1.06

1.27

1990

25.2

23.7

1.22

1.41

1991

25.4

24.5

1.20

1.33

1992

24.9

24.8

1.19

1.30

1993

25.1

25.0

1.17

1.25

1994

24.6

25.2

1.17

1.22

1995

24.7

25.3

1.21

1.23

1996

24.8

25.2

1.29

1.29

1997

24.5

25.2

1.29

1.27

1998

24.5

25.1

1.12

1.08

1999

24.0

25.0

1.22

1.17

2000

24.0

24.8

1.46

1.33

There are two interesting points to take from this table. The first is that because of fleet aging, the overall fleet fuel economy changes much more slowly than the model year averages, and major shifts take place several years after the initial model year change. The overall fleet fuel economy is only just now starting to decline after the peak efficiency model years of the late 1980s. Likewise, improvements in model year efficiency over the next several years will probably not be felt for a decade. In other words, should any problems materialize now, it's too late for a short-term fix.

The other point is that gas prices fluctuate wildly. The last time gas prices spiked like it did in 2000 (and probably into 2001, though data is not yet available) was around 1980. But, in time, prices came back down. Like any other volatile market, periodic spikes should be expected. There is no reason to presume that this time, prices will stay up.

The following graph illustrates the relationship between the overall fleet fuel economy and the corrected average national gas prices. The two scales have been balanced so that a percentage of movement by one data set is visually the same as one percentage of movement in the other data set. This helps to illustrate the gentle and progressive curve of the overall fleet fuel economy versus the highly volatile average national gas prices. Clearly, there is no direct correlation between the fleet economy and gas prices.

This total lack of correlation between the overall fleet fuel economy and the corrected average national gas prices indicates that the presence of greater numbers of trucks in the national fleet has not had, and will not have, a significant effect on the price of gasoline.

So, what does cause increases (or decreases) in gas prices? This analysis will not answer that question; it only eliminates one possible cause. Many of the possible causes defy mathematic analysis. Some suggestions:

  • Global economics. The oil market is global, and significant shifts in one part of the market will be felt everywhere else in the market.
  • Taxation. Most Americans pay at least 40 cents per gallon in taxes. Most other nations are taxed far worse. Governments hide this taxation in the pump price. Try to imagine paying a 30% sales tax for some idea of what happens at every fill-up.
  • Politics. Oil suppliers may play games with the supply for political reasons.
  • Consumption. Americans today drive more than ever, and that affects fuel consumption regardless of how efficiently it is used. The easiest way to reduce fuel costs is to quit driving so much.
  • Other products. Changes in demand for other petroleum-based products, if significant, could affect the price of refined gasoline.
But the fuel economy of trucks is not affecting gasoline prices. For it to do so would require a sudden, massive shift in the fleet fuel economy, an event that has not been documented to date.


Sources:

1. Light-Duty Automotive Technology and Fuel Economy Trends 1975 to 2000, United States Environmental Protection Agency, December 2000. EPA420-R00-008

2. Ibid.

3. Household Vehicles Energy Consumption 1994, United States Department of Energy, August 1997. DOE/EIA-0464(94)

4. Annual Energy Review 1999, United States Department of Energy, July 2000. DOE/EIA-0384(99)

5. Press release, American Automobile Association, March 2001.