Some readers have suggested improved gasoline mileage in cars is the primary reason.
However, that explanation is faulty (as Wallace and I have pointed out on numerous occasions) because mileage rates have steadily climbed over the years while the plunge in oil consumption happened abruptly at the start of the recession and never recovered.
Gail analyzes gas prices, miles driven, increased fuel mileage, and a decrease in industrialization. She concludes ...
Summary of Where Oil Savings Comes From
As stated at the beginning of the post, United States oil consumption is about 4.7 million barrels a day lower in 2012 than would have been expected based on pre-2005 patterns. The way that this savings breaks out by product grouping is as follows:
click on chart for sharper image
Decreased gasoline usage due to improved gasoline mileage amounts to 7% of the total, decreased gasoline usage because of fewer miles traveled amounts to 25% of the total, and a decrease in distillate use amounts to 17% of the savings. The majority of the decrease, 51%, comes from a decrease in the “All Other” category, which is most closely related to a decrease in industrialization.
Going forward, fuel efficiency changes are likely to play a larger role in fuel savings, because CAFE (Corporate Average Fuel Efficiency) Standards have been unchanged for about 20 years. For model years 2012 to 2016, they are again increasing, so auto makers are again making more of an effort to improve mileage.
Actual fuel efficiency gains in the next several years for the US fleet of cars will depend partly on the mileage improvements incorporated by manufacturers, and partly on how many of these more efficient (but also more expensive) cars are purchased.
Prices are high, unemployment is high, and younger kids have completely different attitudes towards cars, transportation, and debt. Robots and Looking Ahead
I gave Gail a call asking about the use of robots. We are in agreement on that score as well.
Some manufacturing is in the process of returning to the US. In isolation, that is an improvement in demand.
However, if manufacturing returns but the jobs don't (and thanks to robots that is the current state of affairs), then the net effect (for as long as that setup lasts) is for a decrease in oil consumption.
For more on robots (with obvious implications on gasoline consumption) please see ...
TownhallFinance.com makes available to the viewer a variety of independent sources that offer trading and investment advice and related services and products.
TownhallFinance.com does not itself offer, verify, sponsor, or promote, directly or indirectly, any investment or trading advice, or information or any product or service offered by these independent sources.
Every investor or trader should consider all advice and all offerings of products and services on their own merits and for suitability to the individual's personal needs and circumstances. Before using this site, please read our complete Terms of Service by clicking here.
Make TownhallFinance.com your premier source for stock market and financial market information. Individual investors enjoy our worldwide investor seminars and trading seminars. Our investment advisor seminars keep financial advisors up to data with CEUs, and this site provides investors, traders, and advisors with the latest stock market analysis tips, information and research tools. Be sure to be a part of our options day trading tips and picks from professional day traders and various trading, investing and advisor Webcasts and financial podcasts.