America's Gas-Pump Puzzle
The good news for oil bulls in the gasoline figures released Friday afternoon by the Department of Energy was that the U.S. really wasn't in a recession in January (actually, that's good news for all of us). The bad news is that the numbers were still surprisingly weak.
The DoE's "Petroleum Supply Monthly" report comes out at the end of each month with revised figures for U.S. oil supply and demand, with a two-month lag. So Friday's report had figures for January. As I wrote here, the less-reliable weekly estimates the DoE publishes had indicated an alarming drop in gasoline consumption (which accounts for about half of U.S. oil demand overall) earlier this year. In some weeks, gasoline demand seemed to be running 5 or 6 percent lower, year over year -- a drop usually associated with recessions or price spikes. 1
Added up, the weekly estimates indicated Americans burned 8.3 million barrels of gasoline a day in January -- fully 4.2 percent, or 363,000 barrels a day, lower than in January 2016. As it turns out, the revised figures show consumption was down by less than 2 percent, or a drop of 167,000 barrels a day.
That is a relief and a nice bookend to a week in which crude oil prices nudged back above $50 a barrel, enjoying their biggest gain so far this year.
But it's also a nagging worry.
Americans drove a little more than 242 billion miles in January, according to the latest estimate from the Department of Transportation (that's right, traffic really did suck). That's up 2.2 percent from a year earlier and the highest level ever recorded for the month of January:
Which makes the decline in gasoline demand, even the smaller revised one, a bit troubling for oil bulls. That's especially true in the context of low unemployment, the boom in truck sales, and gasoline prices that, nationally, averaged less than $2.30 a gallon in January.
One month's anomalous set of data isn't conclusive. But with peaking, or plateauing, demand a consistent theme in energy debates these days, oil watchers obsessing over OPEC supply shouldn't ignore the other side of the equation.
These figures reflect changes in the 4-week moving average for gasoline demand, which is the number quoted in the weekly summary issued by the DoE.
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