Drop In US Petroleum Demand Linked to Conservation
Are high oil prices having an impact on demand? Yes, according to a chart highlighted by FT Alphaville, that shows the volume of petroleum products supplied to the US market droppping to 4% below last year’s level after being 4% higher at the start of the year.
The chart comes from John Kemp of Sempra Metals, who attributes the decline to conservation.
For most of the last four years, commentators have insisted high prices would not result in “demand destruction” and oil demand was now more or less insensitive to prices even at record levels, he wrote in a note to clients.
But the drop in oil demand is now undeniable.
Product supplied ought to have been rising about +1% per year or +3% in the last three years just to keep pace with population increase, according to Kemp. “Instead, total product supplied is down -1.10% since 2005. Gasoline supplied has risen (+1.67%) but less than the population increase, while distillate supplied has been flat (-0.08%). Per capita consumption of crude oil and products is falling sharply”
Fuel conservation seems to have started in H2 2006 and intensified since the start of 2007 in response to the surge in crude oil prices above $60 per bbl.
Research Recap observation: a similar, though less dramatic, drop was evident at the start of 2006, only to reverse itself (compare red and yellow lines on chart.)
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February 29th, 2008 at 1:13 pm
[...] implying that high oil prices may be encouraging conservation, thereby reducing US demand for petroeum products ,were highlighted by FT [...]