Fuel Prices Dropping

[VentureForth]

Can we expect to see any reduction in fare prices with the falling price of oil? Or maybe better farebox recovery of operational expenses? Or are Amtrak's fuel prices too insignificant or contracted to where these prices won't make any difference?

 

[OlympianHiawatha]

Can we expect to see any reduction in fare prices with the falling price of oil? Or maybe better farebox recovery of operational expenses? Or are Amtrak's fuel prices too insignificant or contracted to where these prices won't make any difference?

Amtrak fare cuts will likely be small if at all as the per person fuel consumption is much less than the airlines where fare cuts that should be taking place are not. But since airlines usually work of Hedge Contracts for fuel, I'm giving them the benefit of the doubt for now and if they use that as the excuse, then that means we should be much lower air fares by Summer.

 

[amtkstn]

The price of diesel has not dropped like normal gasoline.

 

[VentureForth]

The price of diesel has not dropped like normal gasoline.

Sure it has. By percentage, It's dropped nearly at the same ratio regular gasoline has.

 

[neroden]

Don't forget that there's been a gasoline *demand* drop in the US. (I verified this with the EIA gasoline-sold-by-refiners chart. Sadly EIA isn't tracking diesel sales volume any more.) If people start driving more and using more gas, the gas & diesel prices will go right back up. If people don't start driving more, then the trains will still be full and Amtrak will have no reason to lower prices. Soooo.

 

[Ryan]

The price of diesel has not dropped like normal gasoline.

Sure it has. By percentage, It's dropped nearly at the same ratio regular gasoline has.

No it hasn't. Over the last 6 months, the average retail price of diesel has dropped 17% ($3.913/gal to $3.213/gal). Over the same time period, the cost of gas has dropped 36% ($3.75/gal to $2.39/gal).

Sources:

https://ycharts.com/indicators/us_diesel_price

https://ycharts.com/indicators/gas_price

 

[VentureForth]

OK - I was just going my my local prices where diesel dropped around 30% and gas around 40% - still a discrepancy, but not dropping at half the rate.

Don't forget that there's been a gasoline *demand* drop in the US. (I verified this with the EIA gasoline-sold-by-refiners chart. Sadly EIA isn't tracking diesel sales volume any more.) If people start driving more and using more gas, the gas & diesel prices will go right back up. If people don't start driving more, then the trains will still be full and Amtrak will have no reason to lower prices. Soooo.

Now my turn to disagree with data:

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M shows that fuel consumption has increased by almost 50% over the past year, and up 30% since the prices were at their peak in July.

The prices are low because the US is pumping oil and we're buying less from the Middle East. OPEC won't raise prices and they are flooding the supply to try and get prices so low that it isn't economical for Americans to access the oil in the Dakotas.

 

[neroden]

We're looking at the same data. Look at that massive continuous drop in gasoline volume of sales from 2007 to 2014 (which, I should note, is completely unheard of for decades before, hasn't happened since the 1970s, and before that not since WWII rationing, and before that never.) Yeah, there's a blip up in October 2014 when the gas prices went down, but it's only back to 2013 levels of gasoline sales.

If people's train vs. car choices hold based on 2013 levels of demand, Amtrak's still going to be bursting at the seams, no reason to lower prices.

 

[Ryan]

Yeah, that looks like a heck of a decrease to me:

 

[OlympianHiawatha]

One key reason Gas Volume Sales have been going down the past decade or so is vehicles have become more fuel efficient.

 

[neroden]

Mmmm, not exactly. The 2007 Prius is actually more fuel efficient than the 2014 Prius. It's true that people have been switching from gas guzzlers to efficient cars, but within each class of car, improvement has been pretty small.

 

[Ryan]

This has something to do with it as well.

 

[Anderson]

This has come up elsewhere, but you've had a mix that has been extremely powerful (and, to state budgets, toxic):
(1) VMT has been flat for the better part of a decade. Per capita VMT has been flat-to-sliding. There are a number of culprits for this (changing driving patterns, aging baby boomers, the economy, etc.), and they're not all mutually exclusive.

(2) While efficiency gains may have been slim within categories for the last few years, two things are still changing. One is, if I'm not mistaken, a shift in vehicle category sales (i.e. from SUVs to more efficient vehicles). The other is the mix of vehicles on the road, both with older vehicles being cycled out and with the aforementioned shift (since there have been gains since the mid-90s). Even if we saw no gains in fuel efficiency among new cars for a decade, we'd probably still see substantial improvements in average fuel efficiency due to this sort of lag.

(3) A third factor is that, to states which switched to a percentage calculation on the gas tax, the fall in gas prices is setting to really slam them. Fewer miles driven with more efficient cars and cheaper gas in these cases is a disaster for those budgets.

Taking these factors together...well, let's talk about the Highway Trust Fund and how revenues there have just totally disintegrated and we're probably going to be looking at another flirtation with it going bust in the next year or two.

As to Amtrak...fuel is, I believe, only about 7% of Amtrak's budget...so the impact here is very limited. It is there, but it is limited in comparison to, say, the airlines. Moreover, this element doesn't matter one bit if a train is sold out any more than it matters on a plane. If an airline can sell a seat for $200 with fuel prices being lower, at most they'll just cut a fuel surcharge and increase the fare on the seat (...or let your fare stay the same and slam you with another fee) so their revenue on that seat remains static.

 

[VentureForth]

Mmmm, not exactly. The 2007 Prius is actually more fuel efficient than the 2014 Prius. It's true that people have been switching from gas guzzlers to efficient cars, but within each class of car, improvement has been pretty small.

My 2002 Saturn 5-speed gas guzzler was more efficient than the 2014 Prius. It only cost me $10k brand new and I wasn't offered any tax breaks.

 

[Ryan]

Who needs anecdotes, when data is readily available?

 

[VentureForth]

Where we are today is relatively unchanged since 1982. The speculation of the ?'s are useless.

 

[Bierboy]

The price of diesel has not dropped like normal gasoline.

Sure it has. By percentage, It's dropped nearly at the same ratio regular gasoline has.

I doubt that. In our area, it's a full dollar or more per gallon than gasoline, and that's a LOT more of difference than a year ago...

 

[Ryan]

You should read the rest of the thread.

 

[Anderson]

Where we are today is relatively unchanged since 1982. The speculation of the ?'s are useless.

Yes, but it seems to be about 3MPG better than in 2005. Remember, there was a flood of light high-MPG cars in the late 70s and early 80s (though I suspect the one year with a massive shift was due to a methodology change)...and those went heavily out of fashion and were replaced by SUVs and whatnot in the 90s.

Just for reference, that 3MPG is about a 15% reduction in fuel consumed...if my math is right. So if VMT are flat, fuel consumption would be off noticeably as well (which it has been, if I'm not mistaken)...which means that while inflation marches on, gas tax revenues don't.

 

[D.P. Roberts]

Mmmm, not exactly. The 2007 Prius is actually more fuel efficient than the 2014 Prius. It's true that people have been switching from gas guzzlers to efficient cars, but within each class of car, improvement has been pretty small.

My 2002 Saturn 5-speed gas guzzler was more efficient than the 2014 Prius. It only cost me $10k brand new and I wasn't offered any tax breaks.

How do you figure that?

Here's a link to the official fuel consumption rates for all 2002 Saturns http://www.fueleconomy.gov/feg/bymake/Saturn2002.shtml . None of them are higher than 29 MPG. The 2014 Prius gets a combined 50 MPG.

 

[Long Train Runnin']

Thank you Ryan those graphs are very interesting. I don't think I would have found them on my own, but interesting to look at.

 

[DesertDude]

The VMT graph that RyanS shared is stunning. Of course the recession is a huge factor, but I wonder if we've experienced a societal shift (for the better). With gas so cheap through the 80s and 90s, I think most people developed a general apathy about how much they drove (e.g., fuel prices weren't a deterrent to living in the exurbs with a 45 minute commute each way). When prices were rising in the early and mid 2000s, most people naively believed that there was just some pesky problem or group to blame (environmentalists, refineries, etc.) and that 90s prices could be had again. Perhaps Americans have finally come to terms with the idea that driving should be a limited activity. More people give careful consideration to their commute when choosing a place to live/work than they did 15 years ago.

 

[neroden]

There's also a generational thing. People who grew up in the late 1970s or later, on average, *don't think driving is fun* -- it's associated with tedious drives through heavy traffic. People older than that still often associate driving with the "open road".

Now think about this. Someone born in 1970 turned 18 in 1988. That would be the very leading edge of the "driving? whatever" generation. This of course was the start of the baby bust, so it wouldn't have a noticeable impact on average behavior until the echo baby boom started a decade later. Those born in 1980 turned 18 in 1998...

So we have generations where, more and more, driving is considered a chore. High gas prices merely exacerbate the desire to avoid it if possible.

----

And then there's portable electronic devices. Which you can use nearly all the time, and they're very popular, but you can't use them while driving. So, driving, a chore full of wasted time.

It's not possible to avoid driving for a lot of people, but where it is possible, more and more people avoid it. Yeah, "semi-automatic cars" might bring some people back to liking driving, and electric cars might bring other people back to enjoying driving, but you still can't use your electronic devices and you're still stuck in traffic.

So I just don't think we're ever going to see another "infatuation with the car" period such as we had in the 1920s and 1950s, and that means permanently dropping VMT per capita.

 

[OlympianHiawatha]

There's also a generational thing. People who grew up in the late 1970s or later, on average, *don't think driving is fun* -- it's associated with tedious drives through heavy traffic. People older than that still often associate driving with the "open road".

Now think about this. Someone born in 1970 turned 18 in 1988. That would be the very leading edge of the "driving? whatever" generation. This of course was the start of the baby bust, so it wouldn't have a noticeable impact on average behavior until the echo baby boom started a decade later. Those born in 1980 turned 18 in 1998...

So we have generations where, more and more, driving is considered a chore. High gas prices merely exacerbate the desire to avoid it if possible.

----

And then there's portable electronic devices. Which you can use nearly all the time, and they're very popular, but you can't use them while driving. So, driving, a chore full of wasted time.

It's not possible to avoid driving for a lot of people, but where it is possible, more and more people avoid it. Yeah, "semi-automatic cars" might bring some people back to liking driving, and electric cars might bring other people back to enjoying driving, but you still can't use your electronic devices and you're still stuck in traffic.

So I just don't think we're ever going to see another "infatuation with the car" period such as we had in the 1920s and 1950s, and that means permanently dropping VMT per capita.

Interesting observations. And let me add today's cars are pure crap compared to what was available up until the very early 70s when the end of the great Muscle Car era came. Most of us can say the same thing about the passenger trains as well

 

[Anderson]

I think we'll see another era where the car makes a comeback, at least outside of major downtown areas...but the societal impact is likely to be more limited next time around. The way I see it, each generation tends to reject what the previous generation had and pick a new path in many ways...usually because that which was built previously is falling apart by then. Witness railroads in the 60s and highways now. We're even seeing it with the airline industry to some extent...though in at least some cases, money is getting poured into fighting back on this front (witness improvements to airline terminals to try and offset the security nonsense).

Ultimately, everything has a life cycle attached to it...usually on the order of 30-50 years, though regular maintenance and renovation can make things stretch quite a bit further (witness the Budds up in Canada, for example). After this point, things wind up getting run down and need to be overhauled...and often the expense of those overhauls will cause things to fall apart. This is no small part of what happened with the streetcar systems: Even where they were breaking even or making a modest profit in the 20s, by the time everything needed to be replaced in the 30s and 40s the numbers weren't there to justify the cost of buying hundreds of new cars and overhaul the catenary.

With that said, I expect the next "car infatuation" phase to hit some time from now...we'll have a generation or so of getting trains and so forth back into order, and then things will get screwed up amid skimpy maintenance and the like while traffic will have died down to more manageable levels in the interim.