Why has gasoline demand fallen?

What do you think? There is a sudden drop in gasoline demand, almost 3% down from same time last year. Why do you think that is? It's quite strange, as the fleet MPG for the US is essentially static.

I'd vote because the cost has skyrocketed, but I don't see that as an option...

People don't buy less because the cost has skyrocketed. You don't just go to the gas station and buy only half a tank! (You could, but that doesn't reduce your consumption).

Unless you are saying that everyone is riding around on "E"? That wouldn't work for more than a few days...

You are right, a combination of things could explain the dip, but it was sudden and drastic.

Also, for every SUV traded in, somebody buys it. Unless of course it's just sitting on the dealer's lot! Maybe the new buyer doesn't go as far as the old owner?

Nate

People were stockpiling gas as the prices went up, further increasing demand and prices; now the markets bottomed, they are using those reserves and demand looks lower.

Sure they do. They may still fill up, but they may forgo optional trips...

You do have a "Staying home whenever possible (no road trips)" option, so I'll go for that. I still think cost is the root cause, and wouldn't mind having that option. But this one will do!

i have noticed what has appeared to be a slight reduction in the number of aggresive drivers... actually i have noticed more people in large vehicles driving very conservatively... some even more so than the strictest PriusChat pulser.

i cant imagine people willing to switch their primary cars because of their commute distance, and i also think that part of it has to do with the fact that the number of hybrids on the road have actually made more of a dent then most think... (ya well... a little wishful, but what percentage would be saved by each hybrid times the amount that are on the road which is close to double last years total)

When 3+ dollar gas reduces the average American's disposable income it is enough motivation to cut back on unecessary trips, use public transportation when possible tellecommute more often and replace the gas guzzler. This was meant to happen. The sudden increase post Katrina raised the awareness level of the average person and start cutting back on consumption.

If however gas drops back to pre Katrina levels a lot of people wll forget about conserving again. The average person has very short memory span.

Also if the gas prices do not drop we might enter a recession in the American economy sooner that we may have thought. The sudden high energy prices and infaltion will affect every aspect of the economy and can hault growth.

haha i had a HUMMER blow by me going ~90 on the way home. all i could do was chuckle at the driver's poor mpg as it passed

It is not surprising that gas usage is down now. 1) summer is over, so families not on vacation. 2) Hurricanes-- even though alot of gas is used in the evacuations and returns. There are at least a few days of no activity in the hurricane area. 3) Higher gas prices-- people cut back on travels, now are somewhat used to the change. People tend to be creatures of habit, or adaptive, whichever you prefer. 4) New Orleans is pretty much gone. You lose a city of that size, the impact will be felt. Remember, many people were, and still might be, in shelters. Just a few thoughts on the subject.

My boss bought a scooter to drive to work, increasing his mpg from 25 to 85. About two weeks after he bought it, he got curious about its tailpipe emissions ...

The price of gas, easily #1.

And I thought it was because President Bush asked people to conserve fuel, so all his strong supporters stopped driving as much as possible out in those strange red states.

It's been quite a few years, but as I recall my Econ 101, the law of supply and demand provides the answer. As prices rise, demand falls (assuming people have choices which allow a drop in demand - elasticity of demand). I can't respond to your poll, because I am sure all of the items you've mentioned, as well as others not listed, are the reason for the drop in demand.

IMHO, this is how things should work. Ideas such as price controls on gasoline just won't work except in the very short run. If gas suppliers get in a squeeze between price controls and their cost of raw materials (a barrel of oil), they stop buying the most expensive oil. Supply is thereby reduced and, guess what, gas lines!

Certainly high gas prices are a burden on most of us, some more than others. But I've already made some changes in my routine to reduce that burden, some of which you've listed in your poll. As more and more people make these adjustments and demand declines further, prices will become more reasonable again.

The price of gas is driving all of the items listed in the poll. I've also noticed that people are driving slower. Especially off the line. My dad is trading in his Passat (22 MPG average) for a shiny new Driftwood Prius. He was tired a spending $6/day on gas. When I showed him that fuel cost calculator on the Toyota site he got very interested. The coolness of the Prius was the coup de grace. 3% decline is pretty cool. That's a lotta gasoline. I wonder what percentage of the 20 mbpd of oil we use a day that is.

Falling demand is one reason. The other is that the Gulf coast refineries are coming back online at last. Supply increases, demand decreases. On the other hand, a guy with a diesel (F250) came up to me in the parking lot today and inquired about my Prius. We got to talking and he said (I hadn't noticed) that diesel was running at $3.49 which surprised me for a few moments but then I recalled that China is burning as much diesel as it can get which drove up the price to begin with but diesel is also used, for the most part, in this country by truck drivers who can't cut back as easily as the rest of us.

To an economist, falling demand means movement of the demand curve itself. A change in the quantity consumed accompanying price changes is far more likely to be movement along the demand curve, rather than a movement of the demand curve itself.

IMHO, all we are experiencing is movement along the demand curve, which is different from a change in demand. Higher prices == less quanity demanded for normal goods (non-Giffen goods).

A change in demand would be due to something like availability of substitutes (cheap ethanol that FFVs could consume for example).

Not in Vancouver BC where I'm currently living. Actually, I think the opposite has happened here.

Well, the summer driving season is over. So combine that usual dropoff with all the other extra problems with prices, hurricanes affecting supply, it adds up.