U.S. Gasoline Use Hits A Record, But That May Not Last

Sep 2, 2016
Originally published on September 2, 2016 6:40 pm

The U.S. has set a new record for how much gasoline the country consumes in a month. Drivers burned more than 405 million gallons of gas a day in June, the latest month counted. The Energy Information Administration says that's the highest amount ever, on records dating back to 1946.

Just a few years back, when the economy was suffering, "staycations" became popular. But now people clearly want to be out on the road. The Federal Highway Administration says Americans drove 280 billion miles in June, up 3 percent from June 2015.

At Valley Forge National Historical Park outside of Philadelphia the parking lot has cars from all over the place — Tennessee, New York, Montana and Washington state.

"Because the gasoline prices have been so low this summer, I've been able to go a lot farther and see a lot more than I initially thought I would be able to," says Roberta Tower of Seattle. She's retired and is three months into a cross-country trip with her small SUV and camp trailer.

Gas prices have declined a lot. Heading into the Labor Day weekend, regular gas is selling for a national average of $2.22 a gallon, according to AAA. That's 40 percent less than two summers ago.

Those relatively low prices are the main reason gas consumption is up. It's a development that has surprised the oil industry and analysts.

They assumed gas consumption peaked in 2007 and would never reach that level again. At first, the Great Recession and higher gas prices drove down demand. More-efficient cars and changing driving habits were supposed to continue the downward trend.

But then the economy improved and gas prices fell as U.S. crude oil production surged. Now, on top of the monthly gas consumption record set in June, the U.S. is on track to set an annual record for 2016.

"I don't necessarily think that's something to cheer about," says Tom Kloza, global head of energy analysis at Oil Price Information Service. He says low gas prices have encouraged people to buy SUVs and bigger cars again.

But even those larger cars are becoming more efficient. The federal government is requiring car manufacturers to make their vehicles get much better gas mileage in coming years.

That has analysts predicting, again, that gas consumption will decline.

"So while we'll be driving more — we'll have more people driving — we will be using less fuel," says Joanne Shore, chief industry analyst at the American Fuel & Petrochemical Manufacturers.

There are still some questions about how fast that decline will happen. For example, many in the millennial generation have shown little interest in owning cars, but Shore says that could still change.

"I think people will be watching whether or not they will fall into lifestyles that some of the older generations typify, which is moving to the suburbs, having children and continuing to drive," she says.

She says there are some other wildcards out there — driverless cars and ride-booking services such as Uber. They discourage car ownership and that makes predicting gasoline consumption years from now difficult.

In any case, Shore, along with most of her fellow analysts, is confident that the peak years of gas consumption are about to become history.

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ARI SHAPIRO, HOST:

Americans are driving a lot more these days, to be specific - 280 billion miles in June. The Federal Highway Administration says that's up 3 percent from the year before. We have two reports now on some of the effects of this increased driving. First, the fact that drivers are burning more gasoline. NPR's Jeff Brady starts us off and reports the country will likely set a new record for gasoline consumption this year.

JEFF BRADY, BYLINE: At Valley Forge National Historical Park outside Philadelphia, the parking lot has cars from all over - Tennessee, New York, Nebraska. It's a good place to find people on a road trip because of low gas prices. Roberta Tower is turning a crank to lower her travel trailer onto the hitch of her SUV. She's from Seattle and is three months into a cross-country trip.

ROBERTA TOWER: Because the gasoline prices have been so low this summer, I've been able to go a lot further and see a lot more than I had initially thought I would be able to.

BRADY: Heading into the Labor Day weekend, regular gas is selling for a national average of about $2.20 a gallon. That's 40 percent less than two summers ago.

TOWER: I've met a lot of people on the road who were doing the same thing I'm doing.

BRADY: And that's showing up in statistics. In June, U.S. drivers burned more than 405 million gallons of gasoline a day.

TOM KLOZA: That's an all-time record. That shatters the record established a couple years ago.

BRADY: Tom Kloza with the Oil Price Information Service says that's a surprise to a lot of people who follow the gasoline market. Even the oil industry thought demand had peaked back in 2007 and would only go down from now on. Back then, it was the Great Recession and higher gas prices responsible. Today, more efficient cars and changing driving habits were supposed to continue the downward trend. But then the economy improved and gas prices fell. Now Kloza says the U.S. is on track to also break the annual record for gas consumption.

KLOZA: But I don't necessarily think that's something to cheer about because some of the reasons that we're breaking it have to do with people making, perhaps, poor choices in what kind of vehicles they're going to use.

BRADY: Kloza says people are buying SUVs and bigger cars again. But now even those vehicles are going to get more efficient, and that means gas consumption will start declining again. Joanne Shore is chief industry analyst at the American Fuel and Petrochemical Manufacturers. She says government regulations require new cars to be even more efficient.

JOANNE SHORE: So while we'll be driving more - more people driving - we will be using less fuel.

BRADY: There are still some questions about how fast that decline will happen. For example, many in the millennial generation have shown little interest in owning cars up to now, but Shore says that could change.

SHORE: I think people will be watching whether or not they will fall into lifestyles that some of the older generations typified, which is moving to the suburbs, having children and continuing to drive.

BRADY: Shore says there are some other wildcards out there - things like driverless cars and ride-booking services such as Uber. They discourage car ownership, and that makes predicting gasoline consumption years from now difficult. In any case, she's confident that the peak years of gas consumption are about to become history. Jeff Brady, NPR News, Philadelphia. Transcript provided by NPR, Copyright NPR.