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Opinion: US gasoline consumption flattens as fuel economy improves

US gasoline consumption

US gasoline consumption is slowing down thanks to increased fuel efficiency due to federal regulations. NBC Chicago photo.

US gasoline consumption slows after two years of brisk increases

By John Kemp

LONDON, April 4 (Reuters) – Growth in US gasoline consumption is slowing after two years of brisk increases between the middle of 2014 and the middle of 2016.

The average fuel economy of vehicles on US roads is improving, as a result of federal regulations, which is offsetting the continued growth in driving.

US refiners and fuel blenders supplied an average of 8.5 million barrels per day (b/d) of motor gasoline to domestic consumers in January, according to the US Energy Information Administration.

The volume of gasoline supplied was down by almost 170,000 b/d compared with the same month a year earlier and 70,000 b/d below the 10-year average.

Lower gasoline sales contributed to the unusually rapid accumulation of gasoline stocks in the first few weeks of 2017.

Stocks held by refiners and motor fuel blenders increased by 20 million barrels during January, almost double the normal seasonal rise of 11 million barrels.

The decline was probably an anomaly caused by poor weather and the timing of public holidays, and is likely to be reversed in future months.

Nonetheless, the rate of growth in gasoline consumption has been slowing since the second quarter of 2016.

Motor gasoline sales have been flattening even though the number of miles driven has continued to rise fairly steadily.

US motorists drove 2.2 percent more miles in January compared with the same month a year earlier, according to the Federal Highway Administration.


Since the drop in oil prices in 2014 and 2015, US motorists have increasingly opted for larger and more fuel-hungry sport-utility vehicles, crossover utility vehicles and other light trucks.

So the mix of new vehicles sold has become less fuel-efficient than was projected a few years ago as more light trucks are sold and fewer cars.

But both light trucks and passenger cars have become much more fuel efficient than the old vehicles they are replacing.

Light trucks produced in 2016 were required to achieve a volume-weighted average fuel economy of 28.8 miles per gallon (mpg) in test conditions, up from just 21.6 mpg in 2006.

Cars produced in 2016 were required to achieve a volume-weighted average of 37.8 mpg, up from 27.5 mpg in 2006.

Critically, the fuel-economy standard for light trucks in 2016 (28.8 mpg) was tougher than the standard for passenger cars in 2006 (27.5 mpg).

In practice, the fuel-economy of both cars and trucks has increased even faster than mandated by federal regulations as manufacturers have responded to demands from customers.

As a result, the average vehicle being driven on US highways is becoming steadily more fuel efficient as old cars and light trucks are retired and replaced by newer models.


The average age of passenger cars and light trucks on US roads is more than 11 years old, according to the US Bureau of Transportation Statistics.

Tougher fuel economy standards started to phase in from around 2010 and the boom in auto sales in recent years has accelerated fleet turnover.

Fuel-efficient vehicles have arrived on U.S. roads in record numbers and the improvement in fleet-wide fuel economy is now starting to blunt demand for gasoline despite increased driving.

The average fuel efficiency of all cars and light trucks on U.S. roads is projected to increase from 21.8 mpg in 2015 to 22.5 mpg in 2017 and 23.3 mpg by 2019 (“Annual Energy Outlook”, EIA, 2017).

Partly as a result, the EIA forecasts gasoline consumption will decline by about 40,000 b/d in 2017 after rising by 150,000 b/d in 2016 and 260,000 b/d in 2015 (“Short-Term Energy Outlook”, EIA, March 2017).

Stagnating gasoline sales at home will leave U.S. refiners increasingly dependent on pushing up exports to Latin America and other emerging markets to boost revenues.

(Editing by Edmund Blair)

John Kemp is a Reuters market analyst. The views expressed are his own.

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