Americans want to drive more as fuel prices decline

America Fuel Prices

America Fuel Prices

A reviving economy and low prices at the pump have enhanced U.S. gasoline demand in the past months after five years of decline, a change that could continue into 2014.

Since 2007, owing to the economic slowdown and expensive gasoline motorists were forced to drive less or buy smaller, more fuel efficient cars but there has been a rise in consumption in the second half of this year

2013 got off to a bad start, with gasoline prices increasing in January and February, due to a various  factors including rise in crude prices, and refinery power outages. The average price of a gallon of gasoline in the U.S. has fallen more than 40 cents since September. According to the Energy Information Administration (EIA) prices on Thursday’s Thanksgiving holiday were the cheapest in three years.

Demand from July to October surpassed monthly government forecasts.  There has been a steady increase in sales by refiners and other supplier’s year-on-year in six of the first nine months of 2013.

The increase has not been found in all areas, gasoline demand in the East Coast continues to tumble but analysts say that in most other parts it still remains competitive. “The slowdown in demand coincided with the slowdown in the global economy, and now that we are moving the other way we are going to see demand pick up,” said Mark Vitner, senior economist at Wells Fargo, who expects demand to increase in 2014.

Since 2007 there has been a steady drop in Gasoline demand as motorists drove less and car fuel efficiency improved. Forecast by the U.S. government states that there is still a 0.4 percent fall in gasoline demand in 2014. According to the EIA, the statistical arm of the Department of Energy demand is expected to rise 0.5 percent this year, after sinking by 0.8 percent to 10.5 million barrels per day in 2012.

Fuel competency

The demand has counteracted improvements in fuel economy over the last year, said Michael Sivak, research professor at the University of Michigan. “The wild card here is the price of gasoline. If it drops substantially, the amount of driving would increase and the demand for fuel-efficient vehicles would decrease,” he said. However in the long run, gasoline demand is widely expected to remain  dented by improving fuel efficiency as new American vehicles available in showrooms are on average 20 percent more fuel-efficient than vehicles manufactured five years ago.

Jay Raol

Recent Posts

Monte dei Paschi performance below par in EU banks stress test

Monte dei Paschi performance below par in EU banks stress test

The depletion of capital at each bank under the test’s harshest scenario will be closely scrutinised, and could potentially lead to hostile takeovers
2 days ago
Nokia to launch T20 tablet with 10.36 inch display

Nokia to launch T20 tablet with 10.36 inch display

The Nokia T20 will sport a 10.36-inch display and will have 4 GB RAM along with 64 gigs of native storage.
3 days ago
Ford sees surprise Q2 profit despite chip shortage and manufacturing hassles

Ford sees surprise Q2 profit despite chip shortage and manufacturing hassles

“The business is ‘spring loaded’ for a rebound when semiconductor supplies stabilize and more closely match demand.”
4 days ago
Audi A6 E-tron Production Launch in 2023

Audi A6 E-tron Production Launch in 2023

Audi has confirmed that there will be multiple variants of the etron, including “basic versions optimized for minimum consumption and maximum range.
4 days ago
Royal Dutch Shell buyback lifts investor sentiment

Royal Dutch Shell buyback lifts investor sentiment

Royal Dutch Shell commences share buybacks before the end of this year while reducing its first quarter dividend to 16 cents per share, a 66% cut.
4 days ago
Citizens Financial to acquire Investors Bancorp in $3.5 billion NYC push

Citizens Financial to acquire Investors Bancorp in $3.5 billion NYC push

Citizens Financial Group, Inc. and Investors Bancorp announced today that they have entered into a definitive agreement and plan of merger in a cash-and-stock deal worth $3.5 billi
5 days ago