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Analysis: Annual US gasoline use falls for first time since 2012 amid higher prices

Houston (Platts)--12 Mar 2018 118 pm EDT/1718 GMT


US gasoline consumption fell for the first time in five years in 2017 as Americans saw higher gasoline prices, drove more fuel-efficient vehicles and their individual travel habits evolved, S&P Global Platts analysis of US Energy Information Administration data found Monday. Monthly data from the EIA show total US product supplied for gasoline -- a demand proxy -- averaged 9.317 million b/d in 2017. This was a decrease of about 0.006% from the prior year, the first decline since 2012.

Although gasoline use declined on average, in certain individual weeks it reached unprecedented heights. In the week that ended August 25, 2017, gasoline product supplied hit 9.846 million b/d, the highest that figure has been in weekly data going as far back as 1991.

A different set of EIA data show that among US states Pennsylvania saw the greatest year-on-year rise in gasoline consumption, with demand growing 11.9% in 2017, while New Jersey saw the greatest decline as consumption there fell 7.1% year on year.

In 2017, Texas consumed more gasoline than any other state, allowing it to reclaim its status as the single greatest user of gasoline after California held the distinction in 2016.

The EIA says this all occurred amid higher gasoline prices, which aligns with Platts data for 2017.

Conventional grade gasoline in Houston, Texas -- probably the most liquid gasoline market in the US -- averaged $1.60/gal in 2017, about 20% above its average in 2016. Premium conventional grade gasoline in Houston followed a similar pattern, averaging $1.74/gal, a 19% increase year on year.

Some Americans also paid more at the pump in certain regions, as some states, including California, Indiana, and Maryland, introduced gasoline tax hikes last year.

Although 2017 was a lackluster year for gasoline demand growth, it is important to view the year in its historical context. In 2015, US gasoline usage rose 257,000 b/d compared with 2014 to an average of 9.18 million b/d. 2015 saw the largest increase in US demand since 1976, when consumption grew 303,000 b/d. 2016 was another robust year for demand growth, as product supplied rose 139,000 b/d.

Thus, while US demand contracted in 2017, 2015-2017 were collectively the three strongest consecutive years for US gasoline demand growth since 2000-2002, when demand rose 417,000 b/d.

In absolute terms, Americans also used more gasoline in 2015-2017 than in any three consecutive years going as far back as 1945.

In this context, it could be argued gasoline consumption had little room to grow in 2017, as Americans bought fewer, more fuel efficient vehicles.

SHIFTING VEHICLE FLEET

There can be little doubt that the nature and size of the US vehicle fleet changed in ways that were not supportive to demand growth last year.

Data from the US Bureau of Transportation Statistics at the Department of Transportation suggests gasoline consumption last year was crimped by more fuel-efficient vehicles.

The data show that the average fuel economy of all US vehicles on the road increased steadily from 2011 through 2015. While data for 2016 and 2017 has not yet been published, US vehicles almost certainly became more fuel efficient on average during those years thanks to the Corporate Average Fuel Economy standards put in place by the US Environmental Protection Agency.

Data from the Federal Reserve Bank of St. Louis show that total vehicle sales in the US fell slightly in 2017 as Americans bought 17.6 million new cars, down from 17.9 million new cars in 2016. This was the first decline in vehicle sales since 2009, which may have been at least partly due to higher gasoline prices.

While total vehicle sales fell year on year, Americans bought more electric cars than ever before. According to Inside EVs, a subsidiary of the Motorsport Network, more than 199,000 new electric vehicles were sold in the US in 2017, beating the prior record from 2016. With more than 27,000 units sold in 2017, the Tesla Model S retained its status as the most popular electric car in America.

These factors help explain why American gasoline consumption fell slightly last year even though US drivers logged more miles in their cars and trucks than ever before.

CHANGING HABITS

US gasoline usage ebbed even though Americans collectively drove more than 3.19 trillion miles last year, as measured in the trailing 12-month average, a 1.17% increase compared with 2016 and the strongest figure on record in data from the St. Louis Federal Reserve going as far back as 1971. This unfolded as Americans increasingly favored working from home as well as domestic travel for holiday breaks and other vacations.

In a 2017 report, FlexJobs, a job search website, said 3.9 million US employees, or 2.9% of the total US workforce, worked from home at least half of the time, up from 1.8 million people in 2005.

This seems to align with polling from Gallup released in 2017 which also show an increase in the popularity of telecommuting. Gallup notes that the trend has been broadly observed across the majority of industries.

While some Americans may have been driving to work less of the time, the total number of miles driven last year may have gotten a boost from a renewed interest in domestic traveling for holiday breaks and other vacations.

Last year, AAA, an auto club, forecast travel during Christmas and New Year period, from December 23, 2017 through January 1, 2018 would be the strongest in US history, with more than 107 million individuals expected to contribute to the highest year-end travel volume on record.

In 2017, MMGY Global, a travel and marketing company, released its annual "Portrait of American Travelers" report. The report found 13.9 million more vacations were taken within the US compared with overseas since the 2016 report. MMGY said the rising preference for domestic destinations spurred more road trips.

--Seth Clare, seth.clare@spglobal.com

--Edited by Keiron Greenhalgh, keiron.greenhalgh@spglobal.com




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