Yesterday, USA Today reported that people are driving less these days:
Americans drove 22 billion fewer miles from November through April than during the same period in 2006-07, the biggest such drop since the Iranian revolution led to gasoline supply shortages in 1979-80.
Today The Wall Street Journal tells us this has resulted in reduced demand for gasoline:
As gasoline prices continue climbing, demand has been heading in the opposite direction. So far this year, Americans have used less gasoline than they did in 2007, with demand since January dropping 1% from last year, according to the Department of Energy…
During the energy crunch of the late 1970s and early 1980s — the last time gas prices were close to current levels in inflation-adjusted terms — consumers sharply cut back their gas consumption. When prices dropped, demand rose again, but at a slower pace because of the embrace of more-fuel-efficient foreign cars.
This time around, the breadth of change in consumption patterns is even more dramatic, and, if oil prices stay near current levels, the decline in demand could be more sustained.
I can tell you one thing: this ain’t bullish for oil.
Once again, Adam Smith prevails. And Newton may be vindicated after all:
(Click for audio)
Sources:
Drivers cut back by 30B miles
Larry Copeland and Paul Overberg
USA Today
June 19, 2008
Prices Curtail U.S. Gasoline Use
Ana Campoy
The Wall Street Journal
June 20, 2008