A decline in gasoline consumption in the U.S. could be a trend that’s here to stay, according to one analyst.
“There has been a noticeable, and I believe permanent, change toward lower gasoline demand,” Andy Lipow of Lipow Oil Associates told Yahoo Finance.
The analyst noted that demand for driving fuel peaked between 2017 and 2019 at just over 9.3 million barrels per day, according to data from the U.S. Energy Information Administration (EIA).
The lockdowns during the pandemic impacted demand in 2020 and 2021. However 2022’s level was down 0.5% from the prior year. Indications of gasoline demand in 2023 is thus far running behind 2022.
“It is the case, in part, because of early retirements,” Ed Morse, head of global commodity research at Citi told Yahoo Finance. “It’s [also the case in part because of changing work habits on how many days people go to work.”
Many workers who used to commute five days a week, now drive less. The meteoric rise in energy costs in 2022 also impacted demand as gasoline prices surged past $5 per gallon last year.
“Not only has working remotely impacted on Americans driving habits, but the higher cost of gasoline has caused the consumer to drive a bit less. Combined with increasing availability and sales of electric vehicles at the expense of gasoline-powered cars, I expect that gasoline demand will continue to decline about 1.0 [%] percent annually over the next few years,” said Lipow.
Diesel demand is also lower, something which Citi’s Morse attributes to “trucks going a little bit greener, and also because volumes may be down simply. This may be part of the slowdown that everyone’s sort of talking about,” he said.
Gasoline usage is seasonal, and it’s expected that come spring and summer, drivers will see prices rise above their current levels of $3.36 per gallon.
China is in recovery mode from its lockdowns, and some analysts see the cost for oil and refined products increasing as that economy ramps up its consumption of energy.
Lipow forecasts $3.65 going into the summer driving season, adding, “According to my Tarot cards, I do not see the national average of gasoline hitting $4.00 per gallon.”
On Wednesday, Brent futures (BZ=F) hovered above $84 per barrel while U.S. West Texas Intermediate (CL=F) crude traded above $77 per barrel.
Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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