Britain sees first sustained improvement in fuel consumption since 2007
3/23/2016 12:00:00 AM
By John Kemp
LONDON, March 23 (Reuters) -- The volume of traffic on Britain's roads is growing at the fastest rate for almost two decades, and exceeded its pre-recession peak for the first time in 2015.
More traffic is resulting in the first sustained increase in fuel consumption since 2007, a development that will be welcomed by refiners and retailers but which complicates the government's climate plans.
Cars, light vans and heavy goods vehicles drove almost 512 billion kilometers on the nation's highways in 2015, up from 500 billion kilometres in 2014, and 489 billion kilometers in 2013.
Traffic grew by more than 4.6% in 2014/15, the fastest two-year increase since 1996/97, according to data published by the UK Department for Transport.
Volumes have now passed the pre-recession record of 505 billion vehicle-kilometers set in 2007.
Britain's traffic growth is closely correlated with the economic cycle, rising in booms and declining during recessions.
Much of the recent increase has therefore reflected a growing economy. But lower fuel prices may also have stimulated traffic growth, according to the Department of Transport.
In 2015, the average price of gasoline was 17% cheaper than in 2013, while the average price of diesel was down 18%, according to the Department of Energy and Climate Change.
Traffic is growing rapidly among almost all types of vehicles and classes of roads, though the fastest increases have been on the inter-urban motorway network and rural roads.
Car traffic has risen by 3.6% in the last two years while heavy goods vehicle traffic is up by almost 3.2%.
But by far the fastest increase among all road classes and vehicle types is the volume of light goods vehicles, also known as vans.
LGV traffic surged by almost 12% in the last two years, with increases ranging from 13% on the motorway network and 14% on major rural routes to almost 20% on minor rural routes.
Even on major urban routes, where traffic from other types of vehicles declined last year, LGV traffic continued to increase, albeit only by 2%, and is up by 8% since 2013.
LIGHT VAN ECONOMY
LGVs, weighing less than 3.5 tons, are the mainstay of the country's army of self-employed workers and small businesses, as well as construction companies, contractors and the growing number of parcel and food delivery companies.
In 1997, when LGVs became identified with a distinct demographic and economic group dubbed "white van man" in reference to the ubiquitous white vans, they accounted for 11% of all kilometers driven on the country's roads.
Since then, the share of traffic attributable to LGVs has increased almost every year and hit 15% in 2015.
Between 1997 and 2015, the number of kilometers driven by passenger cars has increased by only 9% but the distance driven by LGVs rose by nearly 58%.
The increase in LGV traffic relative to cars and HGVs reflects a complex set of social and economic shifts, including declining car ownership and use in urban areas and the rapid rise in parcel and food delivery services.
The increase in small package deliveries to homes and offices as a result of the growth in online retailing is profoundly reshaping the type of traffic on the roads.
Fewer kilometers are being driven by HGVs and more by LGVs as the pattern of distribution from manufacturers to wholesalers, retailers and end customers changes.
The increase in LGV driving is also accelerating the shift in fuel consumption.
Britain's gasoline consumption has declined continuously since the millennium but diesel use has risen every year with the exception of the recession in 2008 and 2009.
Britain imposes the same fuel duty on gasoline and diesel. Roughly similar numbers of gasoline and diesel cars were sold in 2015, according to the Society of Motor Manufacturers and Traders.
But the changing composition of traffic, as well as government measures targeting vehicle fuel efficiency, have resulted in a big shift in the fuel mix.
In 2004/2005, Britain's supermarkets, refiners, traders and other commercial vendors sold roughly equal amounts of gasoline and diesel by weight.
By 2014/2015 diesel sales were more than 80% higher than gasoline.
Gasoline sales have fallen from 19.5 million tons in 2004 to just 13.0 million tons in 2014. Meanwhile diesel sales soared from 18.5 million tons to 23.5 million tons.
Total fuel consumption has declined almost 2.6 million tpy, or 6.6%, since 2007. But all that has come from lower gasoline sales (down 4.8 million tons) while diesel sales have increased (2.2 million tons).
The shift from gasoline to diesel has helped Britain meet energy efficiency and carbon emissions targets but has had the unintended consequence of worsening air pollution, especially in urban areas.
Some commentators have talked about peaking oil consumption, mostly as a result of improved vehicle fuel efficiency, changes in demographics and the advent of electric vehicles.
But Britain's total fuel sales (gasoline plus diesel) rose year-on-year in 2014 for the first time since 2007 and increased again in 2015.
(Editing by Alexander Smith)
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