Home > Cars > Americans’ demand for gasoline declining-…

Americans’ demand for gasoline declining- permanently

The nature of America and its dependence on oil is well documented, exceedingly so. It is the blood that flows through the veins of our nation. It is the power that defines our identity and the fuel that powers the world. It is also one of the greatest source of anxiety for the future of humanity, as the fossil fuel reserves dwindle.

If you head online to your search engine of choice and type in the keywords “oil”, “consumption” and “America”, you will quickly be inundated with results. Dozens, even hundreds of news stories will appear at your fingertips from agencies all over the world. But one type of news will be extremely hard to find in that list- good news. Well here is to bucking that trend.

A new report from the out of the Associated Press confirms that American demand for gasoline and oil reached its peak in 2006, and is now locked in a permanent decline.

Currently Americans are burning 8.2 million barrels (344 million gallons) of gasoline per day. That represent an 8-percent drop from 2006, and that percentage should increase over the years. One analyst, Paul Sankey from the Deutsch Bank, is predicting that by 2030, Americans will use closer to 5.4 million barrels a day, which would put us at a level of consumption that hasn’t been seen since 1969.

Other analysts suggest that the 2030 number will be closer to 6.6 million barrels per day, but all agree that the demand and consumption are on the decline. Both figures are based on the current information, of course. Future innovations and unforeseen economic factors might further lower the demand, just as they have in the last four years.

The reasons for the decline in demand are varied and widespread. The most obvious reason is the recession which came after gas prices had reached record highs in the U.S. The results were obvious. People began to look to save money, and avoiding costly fillips at the pump were an obvious first step, as were taking increasingly costly road trips for fun. But as the economy slowly begins to claw its way back up, that mentality appears to have had a permanent effect on the country.

Along with the financial necessity to look for better fuel economy in our vehicles, came a new set of government regulations that will be mandatory in 2012, which will require all cars to average 30.1 mpg, up from 27.5 mpg. By 2016, all cars will need to reach 35.5 mpg, and beginning next year SUVs and minivans will no longer be able to avoid fuel regulations, when they will legally be classified as passenger vehicles rather than trucks, which are subject to different rules.

Beyond just the governmental pressure, most carmakers are aware of the demand from customers on cars with better fuel efficiency, and more and more cars will begin to hit the streets that are partially or totally electric. The government is also offering billions of dollars in subsidies to encourage this and help sales.

Another law coming soon is regarding the actual composition of the fuel we use. By 2022, America’s fuel mix must include at least 36 billion gallons of ethanol and other biofuels, an increase of the 2011 requirements of 14 billion gallons. Of course, oil companies are currently spending billions on alternative forms of fuel, which could push the efficiency of bio-fuels as well. The oil companies know full well the way the wind is blowing, and most know that the next financial war will be fought through these biofuels and other alternative energy sources. Never underestimate the power and innovation of a corporations’ desire to make money. But even at the current rate of progression, by 2022, one in every four gallons of fuel will be an ethanol or biofuel substitute.

There are also several key factors that are related to age, demographics and lifestyles. The baby boomer generation is entering an age where they will drive less, the surge of women entering the workforce over the last few decades has evened out, and according to the report, people are becoming less likely to accept lengthy commutes into work—vehicle miles traveled per licensed driver has decreased as evidence. More efficient and further reaching public transportation also plays a factor in this.

With the shift to more efficient fuels also come the benefits associated with it beyond just the consumption decrease. As we use less oil, our lessening dependence on foreign sources for that oil can only be beneficial, but a more measureable result will be the decrease of carbon dioxide emissions.

By 2020 the National Resources Defense Council estimates that improved fuel economy and the move away from unregulated SUVs could lower carbon dioxide emissions by 400 billion pounds. Even with the estimated increase of 27 million more cars on the road (which would make the total number of cars 254 million), the effects would be equivalent to taking 32 million cars off the road today.

The decline of demand is surprising, but great news for environmentalists, who originally expected the demand on oil to increase at a rate of 1-2 percent per year indefinitely.

There are still factors that could change the equation though. If oil prices face a massive drop and the cost of automobiles also sinks to record lows, then a rush of new cars could tip the balance and increase demand, but it would require a significant series of events.

There is also China, and the rest of the world to consider. While America still consumes more than twice the oil that China—the second largest oil consumer in the world—the Chinese demand is increasing exponentially.

Still, the growth of China, India and several other emerging nations was expected, while the decrease in American needs was not. The cost of oil per barrel might drop as American demand drops, but it should quickly even out as other countries increase their usage. But for the first time in a long time, the future of American oil consumption can be viewed with optimism.