Views on commodities and energy
U.S. gasoline demand has showed signs of picking up over the past month, edging up 1.6 percent over the past for weeks according to government data. Analysts say lower pump prices have led some Americans to drive more. U.S. demand fell last year for the first time since 1991 as gasoline and crude prices raced to record highs, with further pressure coming later in the year due to the economic crisis.
The above graph shows five years of gasoline consumption in the world’s top consumer, compared with the average price for a gallon of U.S. gasoline.
The amount of money a U.S. refiner can make producing gasoline in the United States has improved in recent weeks relative to diesel thanks to gasoline production cuts and a heavy downturn in diesel demand from the U.S. trucking industry as the economic crisis deepens. Diesel has been the most profitable fuel a producer can make since July 2007 — an unusual occurrence for the less difficult-to-make fuel largely tied to high freight activity and demand from the under resourced global electricity sector.
The early evidence of a reversal in the profitability relationship is already having an impact on what consumers are paying at the pumps: diesel’s price premium to gasoline has dropped from 64 cents a gallon to 43 cents a gallon over the past four weeks, according to auto and travel group AAA.
The drop in U.S. oil demand against year-ago levels has begun to slow as data is compared with weak levels from 2008, when consumption slowed due to the slumping economy and the high fuel prices seen during the first half of the year.
The graph shows the change in U.S. demand over the four-week period from levels from the previous year.