Sunday, 18 January 2015

Will we drive more now the fuel prices have gone down?

The price of fuel for our cars is now going down instead of up - in Birmingham you can get petrol for less than £1/litre[1]. That is good news for many people - but it if it means we are going to drive further, that will be bad for the environment (more emissions, particularly particulates from diesel) and bad for the planet in terms of global warming. So will we? I looked at transport statistics to see how we reacted to the rising fuel price [2].

To start with, I looked at total distance travelled by car (includes vans). It turns out since 1997 the price of fuel has more than doubled but the distance travelled has stayed much the same. I found this rather surprising. It seemed to suggest that we regard travelling by car rather like eating - it is so essential to life we will pay anything to do it. If this were the case, then it also suggests that we won't change our habits when the price goes down - after all we don't eat more when food it is cheap (at least not too much more).

Distance travelled by car and public transport
All data from Transport Statistics Great Britain 2014. Fuel price index from TSGB1308, distances travelled from TSGB0101. This measures passengers, not cars - so if there are two people in the car it counts twice. There has been a small increase in use of trains and buses: up 30% over the period.
However when I thought some more I realised that there are more people and more cars on the road. In fact since 1997 the numbers of cars licensed to be on the road has increased by 27%. More and more of us now have cars, because the car population is increasing faster (1.5%) than the people population (0.6%). So, I divided the total distance travelled by the number of cars (and also by a factor to allow for the ratio of drivers to passengers). The distance travelled per car on the road has definitely responded to fuel prices - down 20%. That isn't as much as fuel prices have gone up, but it is still a substantial decrease
Distance travelled per car
All data from Transport Statistics Great Britain 2014. Fuel price index as before. Distance travelled is total distance/number of cars licensed (VEH0102) and *0.56 to allow for the driver/passenger factor (average of 2002-2012 from NTS0410). This shows a drop in distance travelled per car of 20% since 1997

This suggests that as the price goes down we will drive further again, which is not good for the environment.

There are implications for public policy on regulating carbon emissions from travel. The EU has a cap-and-trade scheme for limiting carbon emissions from industry called the ETS (Emissions Trading System). The decreasing cap on the number of allowances given out means that carbon emissions are definitely decreasing. (Actually the ETS isn't working too well but that is not the subject of this post). For other sectors such as home energy and transport, the policy is to apply regulations for minimum efficiency. There are targets enforced for the average of all new cars. For 2015, the target is 4.9 l/100km for diesel cars and by 2021 it will be 3.6 l/100km [3]. There are similar limits for petrol and other types of vehicle.

However, if reducing fuel prices allows us to drive further, so will increasing fuel economy of vehicles. We may reduce carbon emissions a bit, but not nearly as much as we could have.

Of course we don't have to drive further - we could choose to do other things with our money. For example, spending it on books or beer would generate much less emissions than spending it on fuel [4].

Also, the real efficiency of cars is not increasing as much as the manufacturers would have you believe. There are ways to fiddle the tests [5] - so much so that actual fuel use is nearly a third more than the official figures - and this has got much worse over time [6]. According to the statistics [2, table ENV0103], cars are now 30% more efficient than they were in 1997 - but in practice there probably isn't much change in actual fuel consumption.

It seems to me that relying on increasing efficiency is a very poor way to reduce carbon emissions from transport. We would do better to have a cap and trade scheme like the ETS or an increasing carbon tax. Even the IMF has suggested we take this opportunity to raise taxes on transport fuel and many other commentators are suggesting it [7] [8]. If the tax revenue is distributed equitably, the average car driver does not lose out but it will be a powerful incentive to drive less. I think this is a wonderful idea.

[1] Viewpoints: how low will petrol prices fall (BBC News) 13 Jan 2015
[2] Transport Statistics Great Britain Dec 2014
[3] Road transport: reducing CO2 emissions from vehicles (
[4] Does saving energy reduce your carbon emissions? - avoiding the rebound effect (This blog) 2011
[5] Why your car does not achieve the economy it is supposed to? (This blog) Sep 2013
[6] The WLTP: how a new test procedure for cars will affect fuel consumption values in the EU (pdf) (International Council on Clean Transportation) October 2014
[7] Raise the gas tax: a lot (Washington Post) Jan 8th 2015
[8] Seize the Day (The Economist) Jan 17th 2015

1 comment:

  1. The price of fuel will not stay low for very long, my view is maybe 6 months to a year more. That is because the current price is too low to cover extraction costs for many oil producers, especially those that have invested in expensive extraction processes like Shale and Tar sands. We have already seen most major oil companies announce that they are cutting investment in new projects. This lack of investment is slowly leading to a reduction in oil production. As soon as oil production is less than the demand for oil, prices will increase again. Some predictions are that the price will increase to more than $200 a barrel (currently less than $50).

    I agree with you that high fuel and energy prices incentivises people to be more economical. I drive, and have noticed that people seem to be driving slower these days on motorways, in an effort to conserve fuel. Councils have also participated by putting 50mph restrictions on country roads, which is a more economical speed to travel (and safer). So it is not just about reducing the miles travelled. Maybe a graph showing whether the overall consumption of petrol/ diesel has reduced may be informative.

    I think most people are in a tight spot financially. The increase in people shopping at discount food stores like Aldi and Lidl indicates that people haven't got money to waste. The fuel price drop at petrol stations is fairly insignificant so far. People need to feel well-off to start increasing their outings.

    Plus I don't think the UK government is responsive enough to add additional tax now for a short term period and then reverse it when prices rocket. High fuel prices adversely affect those in rural areas where public transport is poor. Raising taxes on SUVs or inefficient models would be a much better idea.

    Also, part of the reduction in miles travelled is because less young people can afford to have driving lessons and own a car. Reducing fuel prices won't change that. I really think we have seen 'peak miles travelled' and it is all down hill from here.