U.S. gasoline demand soars as price falls

by Gerard Wynn –

featured gasoline image

Weekly U.S. gasoline demand soared to five-year highs last month, after a collapse in oil prices, in a worrying sign that previous gains in efficiency and emissions cuts may evaporate.

The week of Dec. 26 2014 saw the highest weekly consumption since July 2010.

Several years of high oil prices, and the financial crisis, have driven energy savings by consumers and vehicle manufacturers.

In addition, governments have sought to curb oil imports and drive savings and carbon emissions cuts through increasingly ambitious efficiency standards for motor vehicles, planes and ships.

An important question is how far these recent savings have been hard-wired into consumer behaviour, and whether the new standards will drive long-term cuts in carbon emissions and energy consumption.

The first data emerging after the collapse in oil prices are concerning.

The U.S. Energy Information Administration (EIA) publishes statistics for weekly gasoline supplies and retail prices. The data may be subject to review, as a first take. The EIA says the supply data “approximately represents consumption of petroleum products”.

The chart below shows that 2014 (red line) saw the highest weekly consumption for the month of December in the past 10 years. Indeed, last month saw the highest weekly consumption for any month of the year since July 2010. Summer is the traditional U.S. peak, as consumers drive off on summer vacations.

Just to reinforce the point, gasoline consumption in the week of Dec. 26 2014 ranks 14th in all 523 weeks since January 2005. This higher consumption has been carried through into January 2015 (green line).

Weekly U.S. gasoline supplied

The relationship with price can be clearly seen in the next chart, which plots weekly consumption against weekly price. As pump prices have fallen, consumption has risen. Click on the chart to view it in full size.

US weekly gasoline supplied and retail price

These charts are provisional, and the supply figures are approximations for U.S. retail gasoline consumption. But they raise very interesting questions: how far was thrift really hard-wired into consumer brains during the financial crisis; what are the implications for electric vehicles and biofuels, if a fall in gasoline price is so rapidly transmitted into higher demand; and how long will lower gasoline prices last?

The theme of our blogs is energy and carbon. And the implication for carbon emissions is concerning. Transport emissions are very hard to drive down, compared with power generation, where zero-carbon wind and solar power are making in-roads into coal and gas-fired power capacity. Carbon emissions in the transport sector are from millions of point sources, motor vehicles, meaning individual consumer behaviour is important. These data suggest that consumers at present are still very fickle, and will consume more as fossil fuel prices fall.


About steve@bayintegratedmarketing.com

Steve Ulrich is a principal at Bay Integrated Marketing: www.bayintegratedmarketing.com. I have been working with people to maximize their use of social media and internet publishing, optimize their websites to turn prospects into customers, and establish their personal brand on the internet. We are also working with Eco Distribution, Inc. to find and implement practical solutions to help clean up our air and the environment. Eco Distribution, Inc. is a California based Distributor and Representative Firm dealing in environmentally friendly and Green solutions. We have leveraged 30 years experience in responsible construction management to provide solutions for some of the most impactful challenges facing our air, water, and land. We have an oil/hydrocarbon remediation system that is effective on everything from simple oil stains on a driveway, to complex oil disasters in the ocean. My approach to social media and internet marketing is simple. Instead of spending a fortune “buying” keywords and ads that don’t return anything we concentrate on three areas: I CAN GET YOU FOUND ON LINKEDIN - NUMBER ONE, PAGE ONE.
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