Total U.S. liquid fuel consumption fell by an estimated 850,000 bbl/d (4.5%) in the first quarter of 2012 from the same period last year, the Energy Information Agency announced this afternoon. However, hard-pressed consumers did not see that drop in demand reflected in the price of fuel since the energy markets do not always follow academic economic theory.
Gasoline and distillate fuel consumption accounted for most of that decline, shrinking by 240,000 bbl/d (2.8%) and 260,000 bbl/d (6.7%), respectively. EIA expects more moderate year-over-year declines in gasoline consumption, averaging about 40,000 bbl/d over the next 9 months. In contrast, projected distillate fuel oil consumption recovers from the very warm winter with year-over-year growth averaging about 80,000 bbl/d.
During the April through September summer driving season this year, regular gasoline retail prices are forecast to average about $3.95 per gallon, peaking in May at a monthly average price of $4.01 per gallon. EIA expects regular gasoline retail prices to average $3.81 per gallon in 2012 and $3.73 per gallon in 2013, compared with $3.53 per gallon in 2011. This enormous transfer of wealth to oil exporting countries will continue to hurt U.S. economic growth for the foreseeable future.
Despite assumed growth in U.S. real disposable income of 1.7% in 2013, forecast motor gasoline consumption will continue to be constrained by high gasoline prices, as well as slowing growth in the driving age population, and the improving average fuel economy of new vehicles. EIA says gasoline consumption will decline by a further 20,000 bbl/d in 2013.