As oil prices have plunged, US gas demand has soared, something that seemed unlikely just a few years ago.
According to Morgan Downey, CEO of Money.net, “A few years ago people were saying that US oil demand had peaked and would never recover – some called it ‘peak demand.'”
In an email to Business Insider, Downey said the recent surge in demand is unusual because oil has a low price elasticity of demand, meaning that demand is not very sensitive to changes in price.
“Now with gasoline at almost $US2/gallon on average nationwide, US gasoline demand has not only recovered, but is at all time seasonal highs and likely to be at a record high throughout 2015.”
“This 2014 demand rally is a little unexpected and shows that oil consumer behaviour changes during 2008-2013 were temporary and not permanent like many claimed they would be,” Downey wrote.
Here is Downey’s chart showing gas demand in 2014 compared to its 10-year range.