In mid-July, the Energy Information Administration reported that gasoline demand was at its lowest since June of 2004. The combination of a soft economy and better fuel efficiency is contributing to a lower demand. This lower demand is causing, and being compounded by, rising gasoline prices.
Drop in gasoline demand
Over 2008, the demand for both gasoline and oil dropped significantly. This drop in demand coincided with $4 a gallon or higher gas prices. This drop also coincided with increased interest in fuel-efficient and hybrid vehicles. By late 2009, the trend had reversed, though interest in fuel efficient vehicles continues to rise. The demand for oil involves more than just gasoline, though, as a demand for fuel and heating oil tends to go up in the winter months.
U.S. Oil production
The price of gasoline is tied closely to the production of oil in the United States. About 28 percent of the daily requirement of oil in the United States is met domestically, though the shutdown of offshore oil production is starting to trickle down. With so little of the oil used by the United States being produced domestically, the small rise in demand is requiring more imports.
Summer Driving increase
The uptick in demand for oil over the last few weeks has been attributed, partially, to the summer driving system. The American Automobile Association estimates that more and more people will be choosing to drive further this summer.
Comparing fuel use in the United States
The United States is currently the largest consumer of oil and gasoline. China is the second-largest consumer of gasoline, but demand in China is quickly rising to levels that could make it first. In many small European countries where fuel-efficient vehicles are becoming more popular, fuel taxes make the price of a gallon of gasoline as high as $8 per gallon. If U.S. demand continues to increase, and supply continues to decrease, then the popularity of fuel efficient vehicles is sure to continue rising.
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