I’ve been watching US demand for petroleum since July when I first posted on the subject. Demand continued to decline over the summer reaching a low of 18.3 at the beginning of October – well below the peak of 22 million barrels a day in February 2007. The last time petroleum consumption was this low was in 2001.
Now demand has turned the corner and is starting to pick up again. Lower prices for petroleum products are presumably driving this. The question is how much of demand will be recovered? A lot will depend on the state of the economy. But how many consumers may have permanently changed their driving behaviour, or purchased fuel-efficient vehicles? How many have developed an aversion to petroleum products after being stung by the high prices?
Related news article:
- U.S. oil demand down 2 million bpd: BP, Globe and Mail, November 3, 2008
Tags: Petroleum
November 4, 2008 at 10:53
Since September, I’d have thought collapsing consumer confidence, related to the financial crisis, would have as big an effect as prices. Where do you get the figures?
November 4, 2008 at 11:52
I suppose you’re right Will, it’s more to do with the overall economic situation than the price. That’s what BP chief executive Tony Hayward says in the article I attached to the post: “Oil demand in the US has fallen sharply from levels a year ago due to the credit crisis and slowing economy”.
But how much of the slowing economy might have been due to the high oil prices, as well as the credit crunch? If that were the case, the current ‘low’ oil prices would help the economy recover. Nevertheless I’m still interested to see if demand recovers fully when the economy gets back on its feet. A better indicator of a long term substitution effect might be the petroleum intensity of GDP.
I’ll keep watching the data. It’s all available on the EIA website.