Cambridge Energy Research Associates says American gasoline demand will decline this year for the first time in 17 years. This adds to the growing evidence that Americans are actually driving less and changing consumption habits.
The consumption changes can’t come soon enough, as today’s oil and gas environment is starting to mirror the late 70s, early 80s (NYT):
Americans spent about 4.5 per cent of their after-tax income on transportation fuels in 1981, according to Global Insight, a forecasting firm. As gasoline prices dropped and family incomes rose, that percentage dropped to 1.9 per cent in 1998. Today, it is back to 4 per cent or more.
The national price for unleaded gasoline would need to average $4.23 a gallon “to create the same economic pain as in 1981,” the Cambridge Energy report said. “Once unthinkable, such a level is now within view.” On Wednesday, gasoline averaged nearly $4.08 a gallon.
Reduced use will eventually hit prices–in the US and elsewhere. The question is how far consumption will have to fall…and when.