Gasoline Demand -- February 6, 2017

For quite some time I've been blogging about the plunge in gasoline demand. Over the weekend, Reuters finally had a story on the subject.

A reader may have provided a possible reason for the decrease in gasoline demand.

Start with this link: gasoline, winter-summer switch-over; April - May - June. Maybe the RBN Energy post today might be related.

No one has been able to explain the significant drop in gasoline demand over the past few weeks. It simply does not make sense: gasoline is very, very inexpensive; the economy is improving; this winter was one of the warmest on record (the huge winter storms that got a lot of press were short-lived; and regional; and, not a lot different than other years).

So, again, the plunge in gasoline demand makes no sense.

The big question, which a reader alluded to, has to do with this: where is the data being collected? Is gasoline demand collected at the hundreds of thousands of gasoline pumps across the US, or is the data collected at the relatively few wholesale crude oil storage sites that "feed" the US service stations?

I don't know.

Over the past decade, RBN Energy has had any number of stories on all the crude oil infrastructure (including the one today); refinery updates; storage facilities; etc, being put in place to meet the shale revolution. Perhaps the wholesalers now have storage capacity to  better "manage" (some would say "manipulate") the gasoline market.

We are now entering the government's mandated switch from winter-blend to summer-blend gasoline. The official date is May 1 of any calendar year for the switch-over, but the actual date is spread over two months across the nation for various reasons. California mandates an earlier switch-over, as early as April. Because of the logistics involved, most states are given until June 1 to make the switch. 

I don't know.

If the data is collected at the wholesalers' storage facilities, this would go a long way to explaining the decline in gasoline demand. A huge "thank you" to a reader for continuing the discussion.