Wednesday, October 28, 2009

Gasoline demand, August driving and winter weather

Wednesdays are when the TWIP (This Week in Petroleum) is issued by the EIA. Today’s cover note deals with the relatively changing prices of distillates (which includes diesel) relative to gasoline. In the past year the United States has become a net exporter of distillate, and even though the market has fallen, continues to be one, averaging about 350 kbd.

Looking at the gasoline demand, as we move further into a winter heating season, with less driving, there has been a fall-off in demand, though it is still higher than a year ago.

U.S. gasoline demand (TWIP )

When one contrasts this with the changes in driving patterns, now available from the FHWA for August, overall travel is up some 0.7% over August of 2008. Looking at the curve above the greatest impact of the recession on gasoline demand did not occur until September last year, and so this shows a further increase in the recovery. That is best shown by the running 12-month of vehicle miles driven.

12 month running total of vehicle miles driven in the USA. (FHWA)

The upturn in the curve is now clearly defined. The gains are not, however, this month distributed around the USA. Both the North East and the North Central parts of the country are showing a decline in driving, and it is in the South and West that there have been the gains, with Texas and the South Gulf showing the largest increase of some 1.7% over last year. Both urban and rural driving are still showing gains over last year, though now falling away from parity with 2007 (which rural driving almost matched for a short time in July).

We are left to await the coming winter, with the debate as to how hot it will be, relative to normal, given the El Nino condition. Going to the NOAA Winter Outlook prediction site, the winter is largely predicted to be warmer than usual across the country, and as a general rule perhaps a little drier in some parts, though wetter along the coasts. That may help (?) encourage driving over burning winter fuel – we’ll just have to wait and see how it plays out.

Winter outlook for temperatures.

Winter outlook for rain and snow.

These predictions are relatively-short term and it will be interesting to come back to this page in the Spring, and see how accurate the predictions were. (Likely better than mine from 30-years ago, to which I hope to return, perhaps tomorrow).

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