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US Oil Demand Drops in First Half of 2008

US demand for oil dropped 3.0% in the first half of 2008 compared with the same period in 2007, according to the July Monthly Statistical Report from the American Petroleum Institute (API). Gasoline deliveries slipped 1.7% during the period.

At 20.08 million barrels per day, total demand was the lowest in five years.  And the decline in gasoline demand was the first significant one recorded in 17 years.  Higher pump prices and a slowing economy were undoubtedly factors.

—Ron Planting, API statistics manager

At 2.0%, the second-quarter decline in demand for gasoline was even greater than for the first six months.  However, the 1.8% decline for all products for the last three months, compared with the same period a year ago, was less in part because of a 2.1% increase in demand for distillates, which includes diesel fuels and home heating oil.

Reflecting continued strong demand for diesel fuel, industry production for that product set new records for the first half of 2008.

Distillate production averaged 4.23 million barrels per day, the highest ever for any six-month period. However, gasoline production was down only 1 percent, leaving it at the second highest level for any January-through-June period.

—Ron Planting

Overall US oil imports, including crude oil and oil products, sank to their lowest first-half level since 2003, at less than 13 million barrels per day.

Crude oil inventories declined to 301 million barrels at the end of June, down 54 million barrels from last year’s recent-year record and the lowest mid-year level since 2003.  Consistent with relatively stronger demand for diesel fuel than for gasoline, gasoline inventories ended June up from a year ago while diesel inventories were down.  US crude oil production fell by 2.2% for the first half of 2008 compared with 2007.

Comments

rob

And it couldn't happen to a nicer group of companies.

Let's hope this trend accelerates.

Dollared

So, I guess we have our answer about the elasticity of petroleum demand. 3% reduction in use for each doubling of the price. So, I guess when oil reaches $500/BBL, we'll achieve a 12% reduction in consumption.....

And you thought nicotine was addictive. Gawd, I gotta buy some Exxon to go with my Altria stock.

Dollared

So, I guess we have our answer about the elasticity of petroleum demand. 3% reduction in use for each doubling of the price. So, I guess when oil reaches $500/BBL, we'll achieve a 12% reduction in consumption.....

And you thought nicotine was addictive. Gawd, I gotta buy some Exxon to go with my Altria stock.

Reality Czech

Oil consumption is a consequence of long-term decisions, and the elasticity is subject to inertia. US gasoline consumption after the 1970's oil price shocks is an example. Demand began to sink immediately, but only bottomed out in 1985.

allen_xl_z

$500/bbl oil, Istanbul gas prices are pretty close to that mark @ ~$10/gal (~420/bbl).

aym

the price elasticity isn't linear by a longshot. The long term decisions include under funding of public transportation and the encouragment of urban sprawl. The housing debacle and the gasoline/oil prices most likely fed off each other as disposable incomes became slashed. There was probably a demographic contraction as well to reduce travel times/costs which led to some housing to go down in price, further exacerbating the housing prices.

It will more likely to get worse before it gets better. Will people and society learn from it though? Doesn't seem that N Am didn't learn from the 70's oil crisis.

arnold

But as efficiency improves the bottom line will improve,
no pain no gain.

litesong

As mentioned in other posts, the greatest asset we have to combat high fuel prices & inflation is our own waste...more accurately, we can use our brains to cut our waste without cutting our 'standard of living'. & I don't mean everyone has to go buy an economy car, altho I've encouraged people to do that for decades.

A classic example: a fellow at my wife's place of business gathered 6 people to take a Community Transit van to work & back! Suddenly, they are saving more gas than if all 6 had bought cars getting double their present MPG!

Even more efficiency could be found, if people with so-called gas hogs could turn their vehicle into efficient commuter vehicles carrying 2, 3 or 4 people. I used to commute with 4 fellows, taking turns in each other's economy cars. We did OK.

Lots of people can take the bus or train, altho we have talked here how bad mass transit is in lots of parts of the U.S.

Three percent? We ain't even started saving fuel yet. As Nike said...Just do it!

Rick Rohl

This is what I was trying to tell Regan last night. I can't imagine he has a degree in Economics and denies the fact that price affects behavior. He maybe was somewhat clouded on his judgement?

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