BEVERLY, Mass. — While current retail fuel margins are at historic highs, the nagging question is: How much will retail fuel consumption be reduced due to Americans now working from home, the canceling of major gatherings and general sheltering in place?
Here are three predictions on how COVID-19 and social distancing will affect transportation fuel.
Of the 132 million workers in the United States, 10% (or more than 13 million) are working from home. The average commute is 26 miles daily, which equates to a decrease in gasoline demand of 1 million gallons per month until this is over. There will be some increase in driving from “staycations” and reports of people fleeing urban areas for the suburbs and country, as well as driving to simply get out of the house yet remain safe in their vehicle. But for now, a decrease in gasoline consumption is most likely.
The outlook for diesel consumption is more optimistic, which is primarily driven by home deliveries and e-commerce.
We have 165 million trucks in the United States, and 100 million are box trucks used for last-mile delivery. There is little doubt that long-haul carriers such as JB Hunt and Schneider will be hurt with the collapse in container shipments to the United States, especially from Europe and China. The 34 billion gallons used for smaller trucks will increase by 3 billion gallons, however, almost offsetting the 2-billion-gallon decrease in long-haul transport; therefore, we should see annual diesel consumption rise to 55 billion gallons.
The big picture
Last year, U.S. ground transport fuel consumption was 200 billion gallons, including 146 billion gallons of gasoline and 54 billion gallons of diesel. So our average fueling site in the United States sold 1.3 million gallons annually, or 25,000 gallons per site week.
Assuming this crisis lasts all year, gasoline consumption will fall to 134 billion gallons and diesel consumption will grow to 55 billion gallons, for a total ground fuel consumption of—worst case—189 billion gallons or 23,000 gallons per site week for the average retailer, or a consumption decrease of 8%.