As the summer driving season approaches, U.S. gasoline consumption is expected to fall to the lowest level since 2001, while prices are expected to rise to the highest level ever. The figures show that even though Americans are conserving more and driving less, gas prices are becoming more and more dominated by the world market.
Summer prices traditionally go up because the Environmental Protection Administration demands that refiners produce various advanced blends in order to cut down on summer smog. Therefore summer prices usually rise 10-15 cents per gallon over the rest of the year. The historic peak of $3.81 cents per gallon was hit in 2008 during the price run-up that preceded the financial collapse in September of that year. This year prices are expected to reach $3.95 per gal.
The historic peak of summer demand was reached at 9.4 million barrels per day in 2006 and 2007. Last year it fell to 8.9 mbd, the lowest since 2002, and is expected to fall lower this year. The EIA attributes this to improved fuel economy in automobiles and a decline in summer travel. The cutback in demand, however, will not translate into a lower price, at least in historical terms. Prices reached $3.71 per gallon last year and are expected to rise another 24 cents this summer. (These prices are not adjusted for inflation.)
The lesson seems to be that although conservation and fuel-economy efforts are having an impact, world demand continues to put constant upward pressure on the price at the pump.