One analyst believes that the current trend of declining gasoline use in the United States may be one that will continue for some time.
Andy Lipow, president of Lipow Oil Associates, was quoted on Yahoo Finance as saying, “There has been a noticeable, and I believe permanent, change toward lower gasoline demand,” According to information provided by the United States Energy Information Administration, the expert pointed out that demand reached its highest point between 2017 and 2019 at little more than 9.3 million barrels per day (EIA).
Demand in 2020 and 2021 was influenced as a result of the lockdowns that occurred during the epidemic. Yet, compared to the previous year, 2022’s level was 0.5% lower. So far, all indications point to 2023’s demand for gasoline falling farther behind that of 2022.
“It is the case, in part, because of early retirements,” Ed Morse, head of global commodity research at Citi told Yahoo Finance. “It’s [also] the case in part because of changing work habits on how many days people go to work.”
The number of days that employees drive to and from work has decreased for many people. Demand was also impacted by the precipitous rise in the cost of energy in 2022, which had an effect as gasoline prices climbed beyond $5 per gallon in the previous year.
Said Lipow-
“Not only has working remotely impacted on Americans driving habits, but the higher cost of gasoline has caused the consumer to drive a bit less. Combined with increasing availability and sales of electric vehicles at the expense of gasoline-powered cars, I expect that gasoline demand will continue to decline about 1% annually over the next few years”
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Because of the seasonal nature of gasoline consumption, it is anticipated that motorists will experience an increase in the price of a gallon of gasoline that is greater than the present level of $3.36. As a result of China’s economy picking up the pace of its recovery from the recent slowdowns, some analysts predict that the cost of oil and refined products would rise. This is because China’s economy will be boosting its use of energy.
Before the start of the summer driving season, Lipow projects that the price of a gallon of gas will be $3.65. He says, “According to my Tarot cards, I do not see the national average of fuel hitting $4.00 per gallon.” On Wednesday, futures contracts for Brent crude (BZ=F) were trading at a price above $84 per barrel, while contracts for West Texas Intermediate crude (CL=F) were trading at a price above $77 per barrel.
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