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What is driving the declining US gasoline consumption?

Hydrocarbon Engineering,


The Labor Day weekend marked the end of the US driving season, so the EIA too this as a good time to look at gasoline consumption which accounts for almost 10% of global liquid fuels consumption. During the first half of 2013, gasoline consumption was lower than that of the same period in 2012 by 50 000 bpd. Gasoline usage is determined by economic growth and vehicle fleet efficiency and so far this year, economic growth and slightly lower retail gasoline prices, a combination that would usually lead to increased gasoline consumption, have been more than offset by increased vehicle fuel efficiency.

Gasoline consumption trend

In the first half of the year the gasoline consumption trend was more or less a continuation of the trend observed last year, when gasoline consumption also fell by 50 000 bpd compared to 2011. The average decline of 50 000 bpd this year, represents a more modest pace of demand decline than 2011, when significant price increases as a result of Libyan crude oil production outages were the main reason behind an average 240 000 bpd decline in consumption compared to 2010. For 21 of the 30 months that the EIA have published gasoline consumption data, it has declined year on year. The net effect of the income, price and fuel efficiency impacts yields a decline in gasoline consumption of 0.8%.

Getting the facts and figures

GDP for the first half of this year is estimated as 1.7% higher than the same period in 2012 in the USA. Also, in the short term, income elasticity for vehicle miles travelled is approximately 0.6. The elasticity miles suggest that motor gasoline consumption should have been 1% high than this time last year. The average pump price of regular grade gasoline during the first half of this year was 2.1% lower than the same period in 2012. Motor gasoline consumption would therefore have been 0.1% higher this year. Combining the above, the estimated net effect of income and price changes and their respective elasticity estimates during the first half of 2012 imply a 1.1% increase in gasoline consumption over the comparable year ago period.

Yet, when looking at EIA estimates of the light duty vehicle fleet’s fuel efficiency improvements over the last year, the implied average fuel efficiency of the in use light duty vehicle fleet rose by 1.9% in the first half of the year compared to a year ago. Efficiency gains are most likely to reflect both stringent Corporate Average Fuel Economy standards and consumer vehicle choice in an era of higher gasoline prices. 

Adapted from a press release by Claira Lloyd.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/06092013/declining_us_gasoline_consumption624/

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