After popping higher by a little more than a penny during the week-ended Nov. 14, the U.S. average for gasoline sold across the country’s retail outlets should resume its downtrend.
The Energy Information Administration (EIA) releases its weekly gasoline average late afternoon on Mondays, with the average last reported 1.2 cents higher at $3.436 gallon from a better than eight-month low. The average had declined in the three weeks leading up to the 1.2 cents increase.
Since then, wholesale gasoline costs have moved sharply lower, under pressure from ongoing weak demand and on fear over the Euro zone’s sovereign debt issues and what it means for the global economy. The euro zone worries overshadowed a series of macroeconomic statistics showing an improving U.S. economy.
Gasoline prices typically move lower in the fourth quarter, as fuel manufacturing costs are lower while demand weakens from the summer. However, preliminary data from the EIA shows gasoline demand remains atypically tepid, reporting implied demand for the four weeks ending Nov. 11 down 5.7% from the comparable year-ago period. On the year, gasoline demand is down 1.5%.
On Friday (11/18), the American Petroleum Institute said gasoline demand fell in October to its second weakest level for an October since 2002.
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“Weaker gasoline demand is consistent with the disappointing consumer confidence numbers we’re seeing,” said API Chief Economist John Felmy.
Consumers spend less and drive fewer miles when they are concerned over the health of the US economy.
Today (11/21), the Federal Highway Administration shows Americans drove 3.7 billion or 1.5% fewer miles in September than they did during the corresponding period in 2010, with all parts of the country experiencing lower VMT.
Americans are expected to drive more miles for the Thanksgiving holiday, with AAA estimating that 42.5 million of us will travel 50 miles or more from home during the Thanksgiving holiday weekend, a 4% increase from the 40.9 million people who traveled one year ago and the first significant increase in any holiday travel this year.
“Driving AAA’s projected increase in the number of Thanksgiving travelers is pent-up demand from Americans who may have foregone holiday travel the last three years,” said Bill Sutherland, vice president, AAA Travel Services. “As consumers weigh the fear of economic uncertainty and the desire to create lasting family memories this holiday, more Americans are expected to choose family and friends over frugality.”
He added that, “This is the first significant increase in any holiday travel this year. Memorial Day was statistically flat while Independence Day and Labor Day travel experienced decreases of 2.5% and 2.4%, respectively.”
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 15 years as an analyst, journalist and editor. He can be reached at email@example.com.