After seven decades of mostly uninterrupted growth, U.S. gasoline demand is at the start of a long-term decline. By 2030, Americans will burn at least 20 percent less gasoline than today, experts say, even as millions more cars clog the roads.
The country’s thirst for gasoline is shrinking as cars and trucks become more fuel-efficient, the government mandates the use of more ethanol and people drive less.
“A combination of demographic change and policy change means the heady days of gasoline growing in the U.S. are over,” said Daniel Yergin, chairman of IHS Cambridge Energy Research Associates and author of a Pulitzer Prize-winning history of the oil industry.
This isn’t the first time that gasoline demand has fallen in the U.S., at least temporarily. It typically drops during recessions, then bounces back when the economy picks up. Indeed, the recession was the chief reason demand fell sharply in 2008.
But this time looks different. Government and industry officials, including the CEO of Exxon Mobil, say U.S. gasoline demand has peaked for good. It has declined four years in a row and will not reach the 2006 level again, even when the economy fully recovers, they say.
Gasoline inventories are up and have been all year.
So if demand is down and supply is up, why are prices doing this?