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What a bad economy means for gasoline demand

Weak economic growth in the US has led to a dramatic decline in motor gasoline demand, Gagliardi writes. Not only has gasoline demand been weak since 2009, it has been successfully lower roughly each year to year the date in 2013.

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Seth Perlman/AP/File
A motorist puts fuel in his car's gas tank at a service station in Springfield, Ill. Retail fuel consumption may or may not recover to post 2008 levels, Gagliardi writes, but what is clear is that we are living in a world of multi headwinds for energy consumption, relatively high crude prices, and slow global economic growth.
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Lou Gagliardi/Energy Trends Insider
Data from the US Energy Information Administration shows a lag in gasoline demand between 2009 and 2012.
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Lou Gagliardi/Energy Trends Insider
Data from the US Energy Information Administration shows lower gasoline demand accelerated by 2011.
  • By Lou Gagliardi Guest blogger

As we have built more fuel efficient transportation vehicles over the years, we have been able to curtail our consumption of motor gasoline and distillates – diesel. However even with more fuel efficient vehicles, our gasoline consumption as measured by the U.S. Energy Information Administration (EIA) of total product supplied has been fairly stable since the 1980’s as more vehicles have come onto the road to offset greater fuel efficiency. Then in 2008, the Great Recession hit brought on by the financial crisis and the trend accelerated dramatically downward. By 2008 fuel consumption began to slide downward, by 2012 gasoline consumption literally fell off the cliff.

The primary catalyst for the dramatic decline in motor gasoline demand has been weak economic growth in the U.S. that has been exacerbated by stubbornly high retail fuel prices pegged to relatively high crude prices, despite a deepening global recession.

Not only has gasoline demand been weak since 2009, it has been successfully lower roughly each year to year the date in 2013. Within the last month gasoline retail sales have moved upward, whether we see this 2013 trend pass above 2012 remains to be seen. For now, clearly demand in 2013 remains below previous years.

Retail fuel consumption may or may not recover to post 2008 levels, but what is clear is that we are living in a world of multi headwinds for energy consumption, relatively high crude prices, and slow global economic growth.

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