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Wednesday, March 23, 2011

Higher Gas Prices Haven't Decreased Demand

I don't know if posting these stories has any useful value; the information is otherwise widely disseminated. Be that as it may, I found it interesting: gasoline consumption continues to increase in the United States despite increased cost.

I don't know if I've ever seen any statistics on "necessary" driving vs "discretionary" driving vs "purely recreational" use of gasoline and/or diesel.

Something tells me that once we got above $3.00, "purely recreational" and "discretionary" driving started dropping. Common sense tells me that increased gasoline demand is due to increased economic activity.

This has to be a bullish indicator.

Interestingly, this comes when newer cars and trucks have better fuel mileage. All things being equal, if automobiles are getting better fuel mileage, gasoline demand should be going down. For gasoline demand to be going up despite better fuel mileage AND higher prices speaks volumes about economic activity in the country.

Remember, also: the number one selling vehicle in the US in January (or was it February?) was the F-150 Ford pick-up. Pundits remind us that US economic activity can be indirectly measured by sales of pick-up trucks.

It's hard not to be bullish.

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