Prospects for a weak economy and continued high prices for crude oil and petroleum products are expected to cut U.S. petroleum demand by nearly 500,000 barrels per day on average for 2008, according to DOE’s Energy Information Administration (EIA). The EIA’s Short-Term Energy Outlook, released last week, notes that the decline in U.S. oil consumption for the first half of the year was the largest in the past 26 years. Petroleum consumption dipped strongly for the first 5 months of 2008, falling 900,000 barrels per day below the consumption levels during the same period in 2007, but the consumption drop narrowed to 400,000 barrels per day in June and July. The EIA expects U.S. oil consumption to continue falling in 2009, dropping 120,000 barrels per day below the 2008 average. The EIA’s This Week in Petroleum notes that the average monthly U.S. petroleum consumption has been lower than the year before for 12 consecutive months, a trend not seen since August 1991, when a weak economy dampened petroleum demand.
The latest statistics from the U.S. Department of Transportation’s Federal Highway Administration shows one reason why petroleum demand is dropping: for the past 8 months, U.S. residents have been driving less than they did the year before. In fact, the FHWA’s June report on traffic volume trends found that the vehicle miles traveled in the United States dropped by 42.1 billion miles for the first half of the year, a 2.8 percent decrease. Of those six months, the largest drop was recorded in June, with a 4.7 percent decrease. The statistics show the greatest drop (5.4 percent) in the south Atlantic region, while the Northeast experienced the smallest drop (3.9 percent). While U.S. drivers may be taking a number of actions to reduce their driving miles, such as limiting their driving for vacations, the American Public Transportation Association also notes that first-quarter use of public transportation use increased by about 3.5 percent, or about 88 million trips. According to the Bureau of Labor Statistics (BLS), the seasonally adjusted Consumer Price Indices for energy use have increased sharply for the past 3 months, including a 4 percent increase in July.