Gasoline Demand Revival
Boost in consumption, miles driven perk up first-half 2015
WASHINGTON --U.S. drivers are not only filling up more but driving more as well thanks to 2015’s relatively low gasoline prices, according to the latest government figures.
Surging demand pushed retail gasoline prices to a 2015 year-to-date high of $2.84 per gallon on June 15, the U.S. Energy Information Administration (EIA) reported this week. While this is 43 cents per gallon (CPG) higher than in early second-quarter 2015, it is still 85 CPG lower than this same time last year.
Meanwhile, data from the U.S. Federal Highway Administration show that drivers logged 988 billion miles for the first four months of 2015, breaking a previous record set in the first four months of 2007 of 966 billion miles.
EIA revised its Short Term Energy Outlook (STEO) for July upward to reflect stronger demand. Total liquid-fuels consumption for 2015 is now projected to increase 400,000 barrels per day (bpd), or 2.1%, and 120,000 bpd or 0.6% in 2016. These consumption figures for 2015 and 2016 are 20,000 bpd and 70,000 bpd higher, respectively, than in the previous STEO. For some perspective, in 2014, total liquid-fuels consumption grew only 0.4%, or 70,000 bpd.
The agency expects gasoline consumption in 2015 to jump 1.9%, or a projected 170,000 bpd, compared to an 80,000-bpd increase in 2014. It then projects consumption to fall 0.2%, or 20,000 bpd, in 2016 on expected higher gasoline prices and the growing fuel efficiency of vehicles.
Even the fleet’s fuel efficiency is feeling the drag from low gas prices, however, as consumers gravitate toward less fuel-efficient vehicles. The latest figures from the University of Michigan’s Transportation Research Institute (UMTRI) show that the average fuel economy of new vehicles sold in June slipped 0.1 miles per gallon (mpg) from May’s average to 25.4 mpg. “This decline likely reflects the increased sales of light trucks and SUVs in June,” said UMTRI director Michael Sivak.
Fuel economy has fallen 0.4 mpg from its August 2014 peak. But when examined from a longer-term perspective, vehicle fuel economy is still 5.3 mpg higher than when UMTRI first started tracking the measure in October 2007.
John Kemp, a market analyst for Reuters, cited a couple key factors feeding the strongest growth in gasoline demand in a decade.
“Demand only began growing again in 2013 and 2014 when prices stabilized and the economy started to recover,” he said in an analysis. “In 2015, demand appears to be accelerating as the expansion matures and fuel prices remain 25% lower than a year ago.”
He cited an at least 3% higher jump in traffic volumes on U.S. highways vs. year ago as one indicator of revived demand. Another factor: The share of trucks among light-duty vehicles rose from 50.6% to 54% between June 2014 and June 2015, according to figures from Autodata.
The EIA expects monthly average gasoline prices to slide from their year-to-date high to $2.49 per gallon during second-half 2015.