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Energy Economics Weekly Briefings

Highlights from the Energy Institute’s TE3 Conference

Written by: Ellen Hughes-Cromwick

The Energy Institute’s Fifth Annual TE3 Conference, held on October 25-26, 2018, was organized around research papers and expert panels addressing new topics of mobility:  Electrified, shared, connected and automated.  One of the key conference questions was whether any of these new features of mobility would yield a cleaner energy future.  Panel experts discussed whether any of these emerging mobility developments would have the effect of lowering vehicle miles traveled (VMT).  Several of the panelists shared empirical analysis on the behavior of transportation network companies (TNCs) like Uber and Lyft.  Others looked at how digital platforms are enabling social activities and shopping without leaving one’s residence.

This briefing will highlight one of the research paper sessions at the conference.  The topic was “Travel Behavior and Demand.”  The panel covered many of the important dimensions of whether CO2 emissions growth will slow and even decline as new modes of travel gain traction.  The summary below is my own and is not attributed to any of the panelists.  Visit our website here for an archive of slides, photos, and video from the conference.

Paper Session: Travel Behavior and Demand

Chair: Kate Whitefoot, Carnegie Mellon University

  • US VMT has trended higher in the US for several decades (see chart)
  • Recession periods are characterized by a temporary pause in VMT growth; the global financial crisis contributed to an outright decline in VMT for a short period in 2007-2011

Kate Whitefoot is an Assistant Professor of Mechanical Engineering and Engineering and Public Policy at Carnegie Mellon University. Her introductory presentation discussed the transportation sector as a primary driver of petroleum consumption and greenhouse gas emissions across the globe. In total, 72% of petroleum consumption and 28% of all greenhouse gases come from the transportation sector. Thus, VMT plays a crucial role in environmental impacts. Unfortunately, to that end, VMT is expected to increase globally over the next 30 years.

Lang Sui (Aramco Services Company), and Steven Przesmitzki (Aramco Services Company)

“Saudi Aramco produces 10% of daily oil production globally”

American Mobility: Change in American Travel Behavior and Implication on Future Fuel Consumption

  • Transportation accounts for 72% of petroleum use
  • Approximately 20% of travel time per day is due to work
  • 62.2 minutes of driving a day accounted for an estimated 17% of fuel consumption in 2017
  • The chart below depicts the translation of oil consumption for each of five major daily activities described in the US Bureau of Labor Statistics’ American Time Use Survey
  • Work and activities associated with consumer purchases account for 56% of oil used by American households on a daily basis
  • Americans took an average of 2.37 trips per day per person in 2017 compared to 3.2 trips in 2003, a decline of nearly 26%
  • Travel time per day is high for working age individuals: It was an estimated 68 minutes for working age Americans last year
    • Younger age cohorts, for example, the 19-25 year old age bracket, reduced work travel time from 76 minutes  to 60 minutes per day last year, or a 21% drop from the prior year
  • Displaced trips include ability to interact through social media and E-commerce
    • People do not travel for socializing as much anymore

Lang Sui is a Strategic Transportation Analyst at Aramco Services Company. Her presentation was tied to work she did with a colleague at Aramco, Steven Przesmitzki. Sui’s presentation focused on travel behavior and the different driving demographics.  Americans spend about 62 minutes driving each day, accounting for an estimated 2 million barrels per day of oil demand. In addition, they make about 2.37 trips a day (presumably a trip from and to work at least). That number has fallen from 3.2 trips in 2003 as other alternatives such as ride-sharing have entered the market. There is also a stark difference in demographics of drivers. Working age people travel about 68 minutes  a day, while a young person spends around 60 minutes driving per day. On the topic of youth, they are also less likely to leave their place of residence for social activities as compared to prior historical periods. Social media and other digital platform activity has contributed to the drop in travel for social activities. As a whole, this trend is expected to continue, with E-commerce and online digital platforms playing a key role in putting downward pressure on VMT.

Benjamin Leard (Resources for the Future), Joshua Linn (Resources for the Future), Clayton Munnings (Resources for the Future).

Explaining the Evolution of Passenger Vehicle Miles Traveled in the United States

  • Transportation sector is greatest emitter of C02 (60% from passenger vehicles)
  • Increasing VMT will offset the benefits from improving fuel efficiency
  • Amazon effect: online shopping reduces driving
  • Greater demand for public transit, virtual connectivity (for youth)
  • Changes in household demographics and economic characteristics: aging population, falling incomes, high gas prices in 2010
  • Prediction of travel demand will grow at .9% annually through 2025; oil consumption and GHG emissions rise 10% by 2025
  • Travel demand growth slowdown evident in US government statistics
  • Ride sharing is estimated to account for around .5% of VMT in 2017

Benjamin Leard is a research fellow at Resources For the Future (RFF), with interests in environmental and energy economics. He did work accompanied by RFF colleagues Joshua Linn and Clayton Munnings on the evolution of passenger vehicle miles in the US. He began the presentation by explaining that the transportation sector is the greatest emitter of CO2, 60% coming from passenger vehicles. He expects that there will be an increase in VMT associated with improved fuel efficiency, counteracting many of the positive environmental benefits from more fuel efficient vehicles.

Leard also pointed out that the “Amazon effect” of E-commerce will play a role in influencing VMT, reinforcing the points made by Sui. Virtual connectivity could reduce congestion on roads, giving way to more freight and heavy-duty commercial vehicles on the road. Even taking into account this impact, their research predicted an average travel demand growth rate of .9% annually through 2025. During this period, they expect oil and greenhouse gas emission to rise by a cumulative 10%. Leard briefly discussed ride sharing in his concluding remarks.  Their research leaned more toward the potential for more negative outcomes, i.e., adverse environmental impacts associated with VMT growth. Ride-sharing only accounted for .5% of VMT in 2017. As a result, beneficial offsets to greenhouse gas emissions are projected to be limited in the period out to 2025.

Discussant:

Sam Stolper, School for Environment and Sustainability, University of Michigan

  • Average time use for travel dropped between 2003 and 2017
  • Passenger vehicle miles leveled off in the 2000s
  • Structural determinants of VMT include gasoline prices, household wealth, and the “utility” of driving (i.e., when the opportunity cost of VMT increases, the amount of VMT declines)
  • Energy efficiency gains tend to push up VMT

Sam Stolper is a Professor at the School for Environment and Sustainability at the University of Michigan. As the discussant for this panel, Stolper looked at overall trends of vehicle travel in the US and drew some comparisons with other determinants of VMT. First, he noted that average time for travel dropped between 2003 and 2017. Furthermore, VMT actually leveled off during the 2000s in terms of growth. This was largely due to demographic and economic preferences.

There were also structural determinants as well:  Gasoline prices, household wealth, and utility of driving.  Moreover, in this interconnected world, the opportunity cost of driving is relatively high and should not be ignored in the discussion of travel preferences. Finally, Stolper agreed that as energy efficiency rises, VMT increases as well, inducing greater CO2 emissions.