A Simple Fact: Demand For Gasoline Is Down, Yet Prices Are Going Up Why Doesn't The Right's Little Chart Apply?
By John Vlahakis
Gasoline is heading northward once again. Pundits are saying it will pass the $5 a gallon price very soon.
Gas prices tend to spike up when spring and the summer travel season
gets going. But, this year it’s heading up before the vacation travel
season. Reasons for the price increase range from the global economic
recovery fueling demand, oil speculation, global unrest in the Straight
of Hormuz, and believe it or not the declining gasoline demand in the
U.S. Yes, U.S. gasoline demand is declining despite the slight up tick
in our own economy. U.S. gasoline demand has been heading south for
some time now. So much so that the states have begun to raise the gas
tax to make up for the declining tax revenue from their gas taxes due to
declining consumption. Some states have begun to draft legislation to
tax electric car drivers separately because they can no longer get the
tax revenue from the gas pump on these drivers. Consumers are switching
to vehicles that get 30-40 MPG, which includes hybrids, and as the U.S.
nascent electric car share grows the demand for oil will continue to
diminish in this country. At $5 a gallon we are still a great deal
compared to Europe which deals with an $8-$9 a gallon cost. Image
paying $200 to fill up your tank. The good news despite the price
increase is that we as a nation are for the first time lowering our
consumption. We’re setting the new standard for the rest of the world.
Now it’s their turn to follow our lead.
India, China and other emerging markets are using more. In 2010, China
added 10 million more cars. With a population of more than 1 billion
people, that nation is going to use more oil in the future and that
demand will likely drive prices up.
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