"Miles per hour" measures speed. "Miles per hour worked" measures stamina. Namely, your wallet's stamina.
The first, more-familiar gauge captures your standard, adrenaline-soaked fantasies of tearing down the highway in some muscle car sprayed a suitable shade of scarlet. This being Gadfly, though, I'm going to ruin all that and focus on the second, made-up one.
This metric -- MPHW, I suppose -- measures how many gallons of regular gasoline the average American worker can buy with one hour's labor, and how far that gasoline will take them.
How far those gallons will take you, though, depends on how thirsty your vehicle is. Multiplying them by the MPG of your car or truck is how you end up with MPHW. The Department of Transportation publishes annual figures on the fuel economy of America's fleet of light-duty vehicles through 2014. Assuming this has stayed pretty flat since then (for reasons I'll get to below), we can calculate how far an hour's labor gets America's ultimate average driver: earning the average wage, at the average tax rate, driving the average vehicle:
Those two charts could be twins, of course. but one of them has grown slightly faster than the other. While the amount of gas an hour's labor buys increased by 64 percent between 2006 and 2016, the distance our average American worker can go has risen by 72 percent.
Those extra eight miles come courtesy of a slight gain in average fuel efficiency, a result of carmakers, lawmakers and drivers reacting to the last oil-price spike.
As you might expect, a new car provides even more oomph on this front than the fleet average. Michael Sivak and Brandon Schoettle of the University of Michigan's Transportation Research Institute have been tracking the fuel efficiency of new vehicles since October 2007:
Going from 20 to 25 miles per gallon in the space of roughly a decade might not sound like much. But consider that for most of the past century, efficiency went sideways or down, apart from a couple of decades after the first oil shock in 1973. And those five extra miles per gallon make a big difference in terms of how far our average driver gets on an hour's work:
That chart actually understates the difference, because average fleet mileage is being raised as new vehicles enter the fleet, so older cars get even less distance.
You might notice also that the gap hasn't changed much since 2014. That's because new vehicle mileage flattened out in 2014, which is why I've assumed that overall fleet mileage probably hasn't moved a great deal since then.
The reason is simple: unemployment kept going down and then gasoline got a lot cheaper, so Americans went back to buying heavier vehicles.
This, in turn, has fueled a rebound in U.S. gasoline demand:
Having laid to rest claims that U.S. gasoline demand had peaked, oil bulls should be pleased -- but only up to a point.
Gasoline demand growth this year has actually been weaker than was first thought as monthly revisions have cut into initial weekly estimates significantly. Through July, it was up by 186,000 barrels a day. This has been crucial in giving some support to oil prices, but not a game changer.
And given the central role that lower gas prices and rising wages have played, it has to be asked how much extra momentum is left in the tank at this point. The economic picture suggests that gains in employment, and hourly earnings, may continue but not accelerate. Meanwhile, oil prices are rising already on talk of supply cuts from OPEC and Russia and actual declines in U.S. output.
Moreover, while the U.S. remains the biggest market for oil. And while this year's growth in gasoline consumption is bullish, its sensitivity to prices is a double-edged sword.
Moreover, structural changes have occurred and, egged on by tightening fuel-efficiency standards and any sustained oil rally, they will continue.
Look back at the chart showing how gains in MPG for new vehicles topped out in 2014 as Americans bought more SUVs and trucks. One reason they did that was, of course, cheaper gasoline. But it's also because heavier vehicles had also been retooled after the last price spike to burn less fuel.
Look at two of the biggest-selling vehicles, the Toyota Camry sedan and Honda's CR-V SUV. The basic 2011 model of the Camry got 25 MPG, combined, according to data from the Department of Energy, compared with 24 MPG for the CR-V. By 2016, the Camry's rating had gone to 28 MPG, but Honda's SUV increased to 29 MPG.
Going back to our favorite metric, that means this:
The improvement in the SUV's fuel economy is particularly telling, as a law of diminishing returns applies. Raising the rating of a very thirsty vehicle by five miles per gallon cuts out more gallons of gasoline than doing the same for one that's already efficient.
For all you drivers, these are helpful trends, though hardly the sort of thing that sets your pulse racing. But for the likes of OPEC and other market participants that are trying to manage prices, it should -- for all the wrong reasons.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
I've adjusted the numbers using the OECD's estimates for the all-in average personal income tax rate for an earner who is married with no children.
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