Gasoline consumption falls amid high prices, rising vehicle efficiency

by Jeff Della Rosa ([email protected]) 1,002 views 

U.S. gasoline consumption fell in the second quarter and into early July, from the same period last year, according to the U.S. Energy Information Administration (EIA). The decline can be attributed to multiple factors, including high gasoline prices and rising vehicle fuel efficiency.

Still, data from the U.S. Department of Transportation shows vehicle travel rose by 1.6% in April, from the same month last year. Increased vehicle travel typically results in higher consumption levels, but increased fuel efficiency allows drivers to travel more miles using less gasoline and can offset the increased travel.

In April, U.S. vehicle efficiency rose by an average of 2% more miles per gallon from the same month last year, “suggesting that increased efficiency may have offset increased travel and led to an overall year-over-year decline in gasoline consumption,” according to the EIA. The U.S. average of vehicle miles per gallon has risen by 15% to 24.4 in the second quarter, from 21.3 in the same period in 2007.

In June, higher gasoline prices may have contributed to less travel during the month as prices rose by 61%, from the same month last year. However, changes in gasoline prices have historically had little effect on short-term consumption, according to the EIA.

The EIA estimates if prices were to double over a given period, gasoline consumption would fall by between 2% and 4% over that period. The U.S. retail price of regular gasoline was an average of $5.01 per gallon on June 13, the highest inflation-adjusted (real) price for any week since 2011.

According to the AAA, the U.S. average price for a gallon of regular unleaded is $4.28, down 16 cents from last week and $1.12 more than the price at the same time last year. In Arkansas, the average price has fallen 17 cents to $3.86, from last week. The statewide gas price fell below $4 on July 23 for the first time since May 11.

“Sub-$100 per barrel crude oil prices and steady regional supply are contributing to lower prices at the pump,” said AAA spokesman Nick Chabarria. “Gas prices continue to fall nearly daily, but market volatility will largely dictate how long that lasts.”