Economists, Masters of the Art of Denial

cieldumort shared this interesting bit of info from a financial adviser/economist named Doug Short. I like the graphs, especially the population adjusted rolling average. It seems like people are driving less, and that this trend is continuing. That's to be expected, given a chronic shortfall in fuel supplies and the resulting increase in fuel prices.

He ends his article, though, with the kind of cross-your-fingers-and-hope-for-the-best thinking I've come to expect from most economists:

The population-adjusted all-time high dates from June 2005*. That's 74 months — over six years. And since the latest data is the lowest reading since the all-time high, the best we can hope for is that August "might" have been the trough. Our per-capita miles driven based on the age 16-and-older population is about where we were as a nation in April 1997.

(I emphasized the optimism.)

Here's why I consider his final paragraph an uninformed finger-crossing: he has failed to take into account why people are driving less. Here's a thought: could that "all-time high" in June of 2005 have anything to do with another all-time high, this one in world-wide petroleum extraction . . . that happened in May that same year? Come to think of it, aren't all the dips in his chart markedly coincidental with the dips in historical world-wide production?

If I'm right, expect our driving future to start inversely mirroring our driving past. Yes, now we're all cruising like it's 1997. Next year, it'll be 1996, then 1995. . . . What's worse — and, of course, the reason a financial adviser might be a tad concerned — is that all we do we do because of access to cheap fuel, just as I mentioned in The Gas Ceiling. The distances we do not walk or bicycle are distances we can travel thanks to all manner of mechanized — and mostly thirsty — conveyances. Traversing these distances on a regular basis has allowed us to work miles from our homes, eat foods in season no where around us, find the cheapest clothes and appliances made thousands of miles away . . . the list is long. Essentially, every bit of our lives are governed by how much we can make ourselves and the things we need move to where we need these things and ourselves.

When we can no longer fuel this movement, our economy and the lives within it start to sputter. Sorry, Mr. Economist, but no amount of wishing will, ahem, forestall that inevitable reduction in the velocity or frequency of our precious mobility. Our economy — and, again, lives — will simply have to adjust, even if it means investment strategies that functioned wonderfully in the past no longer seem to work.


*For some reason, he labels this peak as "June, 2006" in the graph, though it seems to be closer to June, 2005. I suspect a typo in the graph.