Demand for gasoline in US continues to decline

Gasoline demand continues to fall in the U.S. as pump prices keep climbing.

Gasoline demand continues to fall in the U.S. as pump prices keep climbing.

Reports from government and industry groups show motorists have been cutting back on the amount of gas they put into their tanks for more than a month. That could signal trouble for the economy since Americans typically cut spending on other activities before they do less driving.

Since January, the national average for a gallon of regular unleaded has risen 91 cents, or 30 percent, to $3.98. The main reason is a 20 percent gain in the price of oil this year. Gas rose more than 30 cents in April alone, as refinery problems led to an unusually big drop in supplies.

Gas is now above $4 per gallon in 13 states and Washington D.C.

Reports this week provided more evidence that with prices so high motorists are spending less on gas.

MasterCard SpendingPulse, which tracks retail gas spending, and the Energy Information Administration, which measures gas supplied to wholesale markets, both say that average gasoline demand has dropped for six straight weeks.

Some analysts are calling for $5 per gallon gas by summer. Others see signs the price is near its peak.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, says consumers will be forced to cut back if gas prices go much higher. The run of consecutive price increases — now at 43 days — should end soon, he says, noting that gasoline and oil futures have fallen each day this week.

"You can never tell whether you're in the middle of a price correction, and today we're wondering if we are already there," he said.

Marathon Oil Corp., which owns the Speedway convenience store chain, has noticed even steeper drops in consumption. Gary Heminger, Marathon's executive vice president, told analysts on Tuesday that gasoline demand has fallen roughly 5 percent and demand for diesel fuel has dropped between 3 and 4 percent since the last week of March.

Economists say gas prices, which are visible on many street corners, can have a big influence on consumer confidence. Now they're only a little more than a dime from the all-time high of $4.11 per gallon, set in July 2008.

"The American consumer is reaching a tipping point," retail expert Howard Davidowitz said in an interview with the AP last month. "They're buying cheaper cuts of meat. Instead of a big bottle of ketchup, they're buying a smaller one because it costs less money."

If motorists are conserving on gas purchases, they're probably also cutting back on items like clothing or movie tickets. They could be planning shorter trips this summer, if they take vacations at all, Davidowitz said.


Chris Kahn can be reached at

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