Here are a set of numbers: 8.0, 6.6, 5.3, 4.3, 3, 2.1.
It's the four week year-on-year percentage decline in gasoline consumption, in per as measured by the MasterCard SpendingPulse. It was 8% in the week ending October 24, and it was 2.1% in the week ending November 28. It means that in late October, the four-week average of gasoline consumption was down 8% year-on-year, and now that figure has narrowed to 2.1%.
(P.S. -- for the week ended December 1, the consumption level was down 1%, year-on-year, according to MasterCard).
Here's another set of numbers. 271.8, 246.2, 228.4, 213.2, 195.2, 187.0. That's the Department of Energy's average retail price for gasoline in the US, in cents per gallon.
The idea that gasoline demand in the US is completely inelastic has been largely put in the dustbin of history. What I'm waiting for is for that four-week average to actually move positive, should the price of gasoline tumble further. Is it possible that in such a weak economy that gasoline consumption could actually rise year-over-year? It's very possible, given that average retail prices in the US were in excess of $3 a year ago at this time. If the rate of consumption turns positive, it would join the consumption of Spam as maybe the only product these days where sales are higher this year than last year. (The Spam plant in Minnesota is said to be working at record output to keep up with demand).
One other note: today, when the price of crude on the NYMEX hit $47.27, it was down $100 from its all-time high, set just five months ago.
what's interesting to note, though, is that the EIA weekly numbers are not showing anywhere near the decline as the Mastercard Spendingpulse data. Any thoughts on that?
A very good question. MasterCard has been very open about the flaws in their system, which is why they build in a fairly hefty margin of error. But it's difficult to argue with Point of Sale data gathering. The EIA data is far more modeling, so I'll go with the MasterCard data. Unscientifically, in this weak economy, the one thing that people are dancing in the street over is cheaper gasoline, and as I've said in other forums, getting in your car and going is cheap entertainment at less than $2 per gallon. It's reasonable to expect that yes, the poor economy has softened demand, but at these prices, not that much.