Whats Really Happening With Gasoline Demand?
President Biden recently boasted on Twitter that gasoline prices in the United States have been falling for 50 days straight, noting this was the fastest decline in a decade. The president added a sort of infographic to his tweet informing us that 50 percent of gas stations sold gasoline for $3.99 or less a gallon. What he forgot to mention was that demand for gasoline has been behaving very unnaturally for this time of year.
Standard Chartered this week released a commodity alert that said that this year, driving season in the U.S. never really materialized. The report noted substantial demand declines for both June and July, adding, however, that the recent price decline should result in a pick-up in demand this month.
There has been a lot of talk about the cure for higher oil prices being higher prices still. It appears this might have happened in the U.S. as prices for gasoline earlier this year hit the highest level in several decades. And the national average is still above $4 per gallon, according to AAA.
No wonder then, with inflation raging on, people are opting not to drive, which is affecting demand. According to StanChart data, in July, gasoline demand in the U.S. dropped by 7.6 percent on the year to 8.592 million barrels daily, which, the report noted, was the lowest demand level since 1997 except for the lockdown-heavy 2020.
The Energy Information Administration, however, had a different data interpretation. According to that interpretation, the above gasoline demand figure was as much as 1 million bpd lower than demand during the lockdown-stricken July of 2020.
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