Hovering at a 10-month low, the US retail gasoline price average provided by the Energy Information Administration should continue to leak lower for the balance of the year, benefiting travelers during the holiday travel season. This remains true despite the reality that pump prices are roughly 10% higher now than during the comparable year-ago period.
According to a projection by the Automobile Association of America, 91.9 million Americans will travel 50 miles or more from home during the year-end holidays, which is 1.4% more than for the 2010-11 season. Moreover, if realized it would be the second highest travel volume for this holiday period in the past decade, while representing 30% of the total U.S. population.
Of that total, 91% or roughly 83.6 million of all holiday travelers will drive AAA expects, which is 2.1% more than during the year-ago Christmas to New Year’s holiday season—an 11-day period from Dec. 23 to Jan. 2. It would make holiday road travel the second highest in the past decade and only slightly below, 100,000 less, than the 2006-07 period when holiday road travel peaked. It would also mean that 27% of the US population will be on the roads this holiday season.
View Telvent DTN’s Weekly and Historical Gasoline Price Index.
This projection should bring cheer to gasoline wholesalers and retailers who have witnessed a sharp decline in demand in 2011. Preliminary EIA data shows gasoline demand down 1.7% this year compared with 2010, and signs suggest this trend to continue into early 2012.
Key to the lower gasoline consumption rate has been high unemployment. This feature remains a drag on gasoline demand despite data showing improvement in the employment picture.
US oil refineries are increasing finished products exports such as diesel and gasoline, with the United States switching to a net-exporter in 2011 for the first time since 1949—a trend seen continuing into 2012. EIA data shows that finished gasoline exports averaged 528,000 bpd during the four weeks ended Dec. 9—the latest data available—which compares with 167,000 bpd for the same period in 2010.
This development is helpful for US gasoline producers, but it still falls short in matching the greater domestic demand levels experienced before the Great Recession of 2007 to 2009. Additionally, the global economy remains fragile, limiting growth in fuel consumption.
“While Europe and Japan’s gasoline demand has been in steep decline for years, US appetite for the transportation fuel literally collapsed” in 2011, wrote analysts with the Bank of America Merrill Lynch in an outlook for 2012. “Although [Emerging Market] gasoline demand growth helps stem the decline, total gasoline demand growth for gasoline will remain quite weak.”
About the Author
Brian L. Milne is the Refined Fuels Editor for Telvent DTN—a leading business-to-business provider of real-time commodity information services. Milne has been focused on the energy industry for 16 years as an analyst, journalist and editor. He can be reached at firstname.lastname@example.org.