Thursday, November 20, 2008


Induced Demand is the Whole Point of Infrastructure Investment

Tyler Cowen, "The real problem, of course, is the quality of our decisions on infrastructure."

Until people realize that Induced Demand is the whole point of infrastructure, not a symptom, it will just be pork.

Wednesday, November 05, 2008


Trends in Fuel Efficiency

Analysis is done with gasoline data only for simplification. Diesel fuel is widely used for purposes other than transportation.

Gasoline consumption data and price is from EIA.
Monthly product supplied for Finished Motor Gasoline from the EIA. (I forgot what CPI I used to adjust Prices.)

Monthly Vehicle Miles Traveled is taken from
Historical Traffic Volume Trends from the Department of Transportation Federal Highway Administration.

First graph shows actual DoT vehicle miles driven over EIA finished motor gasoline supplied change from previous month and regular gasonline price change from previous month.

Change in efficiency is calculated for each month/1-year-prior, using 12 month smoothed miles/gallons for each month.

Analysis:In the late 90s, the positive correlation of fuel efficiency and price pretty much breaks down. This is probably due to ocassionally bumping into the efficient capacity of roads and large scale use of electronic controlled fuel injection and and improvements in transmission (e.g. continuously variable transmission CVT). In addition to improving efficiency, the use of electronic controlled fuel injection and transmission improvements have decoupled the relationship of slow acceleration and fuel efficiency.

In the second half of this decade, the relationship of gasoline price and fuel efficiency becomes negative. This is likely due to oversimplified belief of “slow” being more fuel efficient. Slower speeds being more fuel efficient is limited to highway driving. Aerodynamic drag does not surpass the increased efficiency of higher operating speeds until about 55mph for typical vehicles (made before 1999). In addition, electronic controlled fuel injection and improved transmissions can mean that faster acceleration is often more efficient than slower acceleration. People often confuse the idea that slower highway speeds are more efficient with the idea that slower acceleration is, it often is not.

This is all despite less driving and large declines in truck sales.

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