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Fuel Marketer Intelligence: Supply Chain Dynamics to Retail Fuel Prices

Gasoline demand in the United States four months into the year remains strong, running 6% above the five-year average although trailing the peak year in gasoline consumption achieved in 2007 by 0.7% when it averaged 9.286 million bpd.

A lot has happened in the nine years since the consumption rate hit the high watermark, with weekly data from the Energy Information Administration showing gasoline demand in 2007 consistently holding above 9.0 million bpd. Based on that measure, we’ll likely not see the 2007 record broken this year, with EIA statistics detailing three full weeks in January in which implied gasoline demand slipped below the 9.0 million bpd threshold.

It wasn’t immediately known that the United States slipped into what would become the worst recession since the 1930s during the final month of 2007 which would endure until June 2009, with the oil price bubble popping during the second half of 2008 after first spiking to record highs in July 2008. Job losses swelled, with the US unemployment rate peaking at 10.1% in October 2009, and gasoline demand averaging 8.997 million bpd that year.

Gasoline demand in the United States is elastic, and the job losses not only meant fewer commuters on the nation’s roadways, but also robbed the consumer of his and her confidence in the economy triggering conservation. Employment and gasoline demand remain closely correlated in the United States.

It would take six years before US gasoline demand would average more than 9.0 million bpd on an annual basis, with consumption in 2015 at 9.161 million bpd. Cumulatively through late April, preliminary data from the EIA shows gasoline supplied to the primary market running 365,000 bpd or 4.1% above the 2015 pace.

The national unemployment rate ticked up 0.1% in March to 5.0% with the uptick caused by more people looking for work as opposed to layoffs. In March 2015, the jobless rate was at 5.5%.

The US labor market has been a bright spot in an otherwise slow growth economy since the recession, with annualized growth up a meager and less-than-expected 0.5% during the first quarter, the View Full Article