
For all the debate about strong sales of trucks and SUVs this year, American gasoline consumption is actually going down and may have reached an all-time high. Fox News may filed the AP story under “Disasters” but the worst news in the story is that
America will continue to burn more gasoline than any other country, in total and per capita, for decades to come. China is second in total consumption, but, despite its explosive growth, still uses just half of what the U.S. uses. Canada is second in consumption per capita but is on its own path toward a more fuel-efficient economy.
While America’s diminishing demand will temper global demand, it will be more than offset by rapidly growing demand in China, India, the Middle East and Africa. As a result, declining U.S. gasoline demand will not bring lower pump prices.
The AP gives most of the credit for the projected decline in gas consumption to demographic shifts and government policies like CAFE standards and ethanol blending credits. The coming of electric and plug-in vehicles is even given some credit as a long-term driver of lower gas consumption, but the success of alt-energy cars does seem to be dependent on the pump price of gasoline. And, in fact, if you look at medium-term historical gas prices it seems that unleaded is unlikely to ever cost less than it did in 2006, indicating that a gas tax would have been at least as effective as the convoluted CAFE and ethanol policies. Now that gas seems unlikely to ever drop below the $2.50/gallon mark, baby boomer demographics and complex government policies need not take all the credit.
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