Demand In-Destruction -- December 26, 2014

When gasoline was approaching (and occasionally exceeded) $5.00/gallon, there was much talk about "demand destruction."

So, what's happening to gasoline consumption / demand destruction as the price of gasoline slides?

First, this spreadsheet at EIA. Some observations:

• the data is current through the end of 2013
• this is "gasoline supplied," not consumed, but one has to assume that most/all gasoline supplied was consumed
• it appears the record consumption was 3.389 billions of gallons of gasoline in 2007
• after 2007, US consumption decreased from that peak for any number of reasons
• for the most recent full year reported, 2013: 3.228 billion bbls

Now, to 2014, the weekly consumption (demand) for gasoline in the US, scroll to the very bottom of that page:

• the graph is AVERAGE; the spreadsheet below the graph is million bbls/day
• look at the graph first: for 2013, this time of year, about 8.75 million bbls/day, AVERAGE
• for 2014, in December, reaching 9.5 million bbls day (daily, spreadsheet)
• the trend has been rising every month since September (with one exception)
• the delta between 2013 and 2014 during the LOW driving season is widening
• I can't tell for sure, but it appears that we are now exceeding the record set on Memorial Day weekend and early June, 2014

Now look at the numbers:

• one year ago: 9.176 million bbls/day (spreadsheet)
• today: 9.518 million bbls/day (spreadsheet)
• 9.518 - 9.176= 0.342/9.176 = 3.7% increase year-over-year
• take the high point this month, 9.518 * 365 = 3.474 billion bbls annual rate
• 3.474 (current annual rate) - 3.228 (total consumed 2013)/3.228 = 7.6% increase
• until recently, the record amount of gasoline supplied was in 2007, at 3.389 billion for the year
• compare that with the current annual rate (during the LOW driving season): 3.474 billion

It's hard for me to believe that gasoline demand won't increase (all things being equal) by Memorial Day, 2015, for at least two reasons:

• lower price at the pump will drive more consumption
• US economy is improving (most recent GDP at an astounding 5% growth rate)

It would be telling and it would be ironic and it would be notable if US gasoline consumption hits a new all-time record in 2015, despite the CAFE standards, the slow economy, the EVs, the hybrids, the Teslas, and the shift to smaller cars.

For a 30-second sound bite: 8.75 million bbls/day of gasoline supplied in 2013 vs current 9.25 million bbls/day during the LOW driving season today.

I mentioned a few weeks ago that of all the metrics I follow, this one (US gasoline demand) will be one of the most interesting. My hunch is that we will set a new record for gasoline consumption by Memorial Day, 2015, if the economy keeps growing and the Saudis keep giving away their oil for $50/bbl. And despite the conclusions reached by the authors of that silly Bloomberg story, December, 11, 2014.

The record was 2007: 3.389 billion bbls for the year = 9.28 million bbls/day. Now, during the LOW driving season, 9.518 million bbls/day.

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From another site: