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Under the radar: Some trends are obvious enough and visible to all investors. Others are more-subtle, but are just as potent, and these often slip 'under the radar.'Case in point: the decline in gasoline consumption. As many U.S. motorists will no doubt attest, it was a perplexing driving season concerning gasoline prices.
The driving season - Memorial Day in May thru Labor Day in September - occurred during a U.S. recession that's seen about SEVEN million Americans lose their jobs, and amid a sustained pull-back in consumer spending (including gasoline consumption).
Amid such tepid conditions for business/leisure travel, one would expect gasoline prices to fall or at least stay approximately the same. Nope. Didn't happen. Gasoline prices rose, propelled higher largely by the doubling in oil's price. A roughly $1.75 per gallon U.S. average price for unleaded regular rose to about $2.30 by Memorial Day, and then topped out at about $2.65 this summer, according to data compiled by gasbuddy.com.
In others words, despite the recession and reduced overall demand, gasoline prices did what they typically do during the summer driving season: they rose.
If there's one consolation in the gas price picture it's that oil giant Total SA (NYSE: TOT) said it expects both U.S. and European gasoline demand to decline through 2020, The Wall Street Journal reported.
The above suggests future, downward price pressure on gasoline. Of course, the price of oil, which typically accounts for at least 50% of gasoline's price, will be a key factor in gasoline costs, but if Total's forecast is accurate, there may be some relief at the pump ahead for U.S. motorists, if oil's price, currently about $69 per barrel, doesn't rise.
And lower prices at the pump are something U.S. motorists would love to see, after the summer of rising gas prices during a recession.
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Reader Comments (Page 1 of 1)
9-21-2009 @ 4:19PM
Donovan said...
Considering the excessive cost of gasoline, consumers have opted to reevaluate their driving habits. I remember when I was much younger, every Sunday my parents took us on a long Sunday drive, it was just to see the sights and spend quality time as a family. Considering what a tank full of gas cost's these days. The family just going for a Sunday family drive is now rather costly, and out of the question for many on a budget. If you have a 30 gallon gas tank and fuel is 2.58 a gallon as it is here, thats $77.40 And I don't see the cost gas going down much in the future, even with all the newer high gas mileage vehicles. If nothing else gas prices will go up even more, to make up for fuel consumption revenue losses, due to these newer vehicles that do get 25+MPG. The oil/fuel companies aren't going to suffer a loss of revenue, just because consumers are perhaps now getting 750 miles out of one tank of gas, and only need to fill up once every 2 or 3 weeks.