The latest report from CCC Intelligent Solutions finds that high gas prices are likely to have a minor impact on miles driven and, therefore, accident frequency for the rest of 2022 and 2023. Susanna Gotsch, senior director and industry analyst, says vehicle miles traveled may decline by as little as 0.4% or as much as 5.1% for 2022, even as gas prices hit records.
Speeding and distracted driving remain above pre-pandemic levels, and more trucks are on the road as compared to personal vehicles with the growth in e-commerce.
Gas prices began to decline slowly in July 2022 but remain elevated, according to the report.
“With gas prices hitting records, there have been a lot of questions about the impact of higher gas prices on vehicle miles traveled and accident frequency,” Gotsch says. “While there have been numerous studies showing there is some correlation, a lot of it depends on how much higher gas prices go and how long they stay there.”
A Congressional Budget Office analysis of vehicle miles traveled (VMT) during the recession of 2007-2008 confirmed that higher gas prices have a more enormous impact on vehicle miles traveled the longer they remain elevated. The Energy Information Administration forecasts that prices for regular gasoline will average $4.05 per gallon for 2022 and $3.57 per gallon in 2023. Those figures were $2.18 per gallon and $3.02 per gallon in 2020 and 2021, respectively.
The analysis concluded that a 10% increase in gas prices is estimated to reduce VMT by as little as 0.2% to 0.3% in the short run and 1.1% to 1.5% in the long term. The analysis also found that between 2003 and 2008, every nominal increase of 50 cents per gallon saw median driving speeds on uncongested urban freeways fall by three-quarters of a mile per hour. The weekday traffic on freeways next to commuter rail systems also declined by approximately 0.7%.
“Fewer VMT would have some impact on auto claim frequency, just as it has in past recessions,” the report continues. “However, there are some important considerations that could mean we might not see any decline in auto accident frequency now.”
For one, the U.S. unemployment rate is at a historic low, as 1.3 million Americans collected federal unemployment checks at the end of June 2022. During the 2007 recession, that figure was 6.5 million. That means more people are on the road heading to and from work. However, it’s estimated that 20% of U.S. workdays are now conducted remotely, while that figure sat at 5% prior to the pandemic.
“Despite this shift and despite higher gas prices, auto claim frequency continues to recover towards pre-pandemic levels,” according to CCC.
Another factor is the large number of people who have relocated to suburban areas with limited public transportation options. Speeding and distracted driving remain above pre-pandemic levels, and more trucks are on the road as compared to personal vehicles with the growth in e-commerce.
“The combination of these factors, as well as the relatively small decline in vehicle miles traveled during past recessions, suggest that high gas prices and a possible recession will likely have only a minor impact on miles driven and accident frequency the remainder of this year and next,” the report concludes.
