Weak Economy, Weak Gasoline Demand

Jane Van Ryan
Posted August 20, 2010

The faltering economy appears to be a primary reason for a slight drop in U.S. gasoline demand. According to API's Monthly Statistical Report issued this morning, U.S. gasoline deliveries (a measure of demand) fell by 0.03 percent in July as compared to the same period a year ago. Except for 2008, it was the lowest July gasoline demand figure since 2003.

"With unemployment high and July regular gasoline prices more than 20 cents a gallon above those a year ago, consumers likely have been shopping and vacationing less and trimmed their gasoline purchases accordingly," said API Chief Economist John Felmy.

Overall demand for oil products rose 3.8 percent in July over the same month last year. Demand for the type of diesel fuel used in trucks was up significantly.

"This suggests some growth in industrial and commercial activity," John said. "But a recovery it certainly does not prove. We need to be cautious about implementing policies, including increasing taxes on the petroleum industry, that could squelch nascent growth and keep more Americans unemployed."

Also in July, refinery utilization rates rose to 87.4 percent, marking the third consecutive monthly increase. Crude oil imports were up by 5.6 percent from July a year ago to 9.6 million barrels per day.