Historically low gas prices lead to significant increases in miles driven

Contrary to what some might believe, 2016 was a year of historically low gas prices, and it had the increase in miles driven to show for it.

Both 2015 and 2016 saw an increase in miles driven greater than any year in the previous 20. And despite the general perception that gas prices are unnaturally high, veteran industry watcher Jim Lang explains that when you adjust for inflation, today’s prices are lower than what they were during the great depression.

“The 2016 price of regular gas across the U.S. averaged lower at the pump (adjusted for inflation) than gas prices during the depth of the Great Depression, 80 years earlier in 1936,” said Lang. “Regular gas averaged $2.16 per gallon during 2016, less (adjusted for inflation) than the 20¢ per gallon pump price in 1936.”

These historically low gas prices have meant significant increases in light vehicle mileage, with 2015 showing a 3.4% increase and 2016 increasing by approximately 2.8%.

This increase in mileage is often perceived to have a direct correlation to aftermarket product volume, and yet, Lang points out that recent years have demonstrated this is not always the case. From 2012 through 2014, car and light truck product sales climbed by 2.5%, even with little annual mileage growth.

This spotty relationship was also demonstrated in the past two years, with a strong increase in miles driven in 2015 as well as a climb in aftermarket volume, but with 2016 seeing a substantially greater growth in miles driven than car and light truck product volume.

“The strong uptick in 2015 mileage was matched with a robust 3.4% increase in car and light truck mileage for the year,” Lang writes. “However, the relationship did not continue through 2016. It appears (on a preliminary basis) that light vehicle 2016 mileage percentage growth was substantially greater than the rise in car and light truck product volume.”

So although low gas prices have meant good things for the drivers on the roads, it remains unclear if it will have the same positive impact on the aftermarket.