Posted on 06/23/2006 11:24:02 AM PDT by newgeezer
NEW YORK (Reuters) — U.S. motorists may be complaining about higher gasoline prices this year, but they will still be pumping more gasoline than they did in 2005, extending a 23-year streak of rising gasoline demand in the world's biggest oil consumer.
Drivers in the United States used an average of 9.13 million barrels per day of gasoline last year, 11 percent of total world oil consumption, but only a modest 0.2 percent annual rise compared with normal increases of 1.5 to 2 percent, according to the U.S. Energy Information Administration.
The slowdown in demand growth is due to the rise in pump prices, which have surged since an active hurricane season in 2005 forced the closure up to 25 percent of U.S. refining capacity.
U.S. retail gasoline prices have averaged $2.31 per gallon in 2005, up from $1.90 in 2004, according to the EIA.
Gasoline prices are even higher this year, averaging over $2.90 since the end of April, but despite the rise in prices, gasoline demand is still growing.
Preliminary EIA data suggests that gasoline consumption has risen by 0.9 percent so far this year.
While EIA officials caution that preliminary data is often revised lower when more detailed monthly data becomes available, the EIA and other analysts are still predicting that gasoline demand will rise by at least 0.5 percent this year and could even reach 1 percent.
"I think June and July are in that range, with August maybe being slightly higher than 1 percent," said Doug MacIntyre, an EIA analyst.
Continued...
(Excerpt) Read more at today.reuters.com ...
there are (will be) changes. what is happening here, shows us that americans are unwilling to change their behavior (so long as their credit cards still work). they won't drive less. but what they will do, over time, is buy vehicles which will allow them to continue their current driving habits and distances, while using less gasoline. hybrid sales are going to increase dramatically, and plug in hybrids are going to emerge.
but notice also - this tells us - there is no supply problem. demand increases, and product is there, there are no shortages.
Greenspan gave what I thought was the most clear and concise speech of his career on the energy market a couple of weeks ago to a senate committee. he explained what has happened to supply at the margin, who controls it, how the hedge funds have gotten into it in a HUGE way, how countries with supply are not investing to produce enough to "gap" the hedge funds and take the speculative price premium out of the market. and how the US is powerless to do anything about it right now.
he said the the next 20-25 years would be a race between western nations to find other sources of energy and bring them online as fast as possible, versus nations (most of whom are not friends of the US) that have the oil reserves (along with the US majors and Wall Street), who want to keep the current system in place and keep prices high.
You and the high horse you rode in on.
I guess your eyes don't glaze over at a discussion of economics like most people's. Sorry to have offended you.
So what you're saying is that availability of credit resources to pay for gasoline (a non-price factor) is causing the demand for gasoline to be artificially higher than it would be otherwise (or at least more price inelastic than it would be) and that eliminating this resource would shift the demand curve inward. That is very possible. Since that would represent a reduction in quantity demanded at the current price levels, as opposed to a reduction in quantity demanded in response to a further increase in price, that would reflect a reduction in demand. Thank you for helping to illustrate my point.
Some people have a great capacity to make something simple sound very complicated and then assume an air of superiority when others fail to comprehend their gobbledygook. I don't pay them much attention anymore. VRWCmember falls in this category. Of course price does not affect demand it is just that fulfilled demand becomes unfulfilled demand or some such. Lordy, I still wants it, I jist don't be gittin' it no mo'!!
well, why didn't you just say that to begin with. instead, you are giving us some Alan Greenspeak.
but this would not happen with other products. People buy food with credit too, but if the price of chicken doubles over the next year, people will buy more turkey and beef. with gasoline, there is no where to go. either a person changes their lifestyle and drives less, or they don't. americans won't, what they will do is shift their purchases of the items that consume gas, to allow them to keep their lifestyle in the face of higher prices - hybrid sales will rise, so will sales of diesels once the new clean fuel is available in 2007.
With gasoline, the short term reality is that there are no real substitutes. Thus, demand for gasoline is more inelastic than the demand for chicken. So increases in the price of gasoline affect demand for other products as consumers shift more of their funds to buy gasoline that would have gone to buy other products. It is essentially the same effect on the demand for other consumer goods as if incomes had decreased because gasoline required to get the consumers to and from work etc require that they allocate more of their income to gasoline. In the long term, consumers can make adjustments like carpooling, buying higher fuel-efficiency cars or hybrids, shifting to diesel or bio-diesel automobiles, or lobbying their local governments to provide better mass transit alternatives to reduce the need to drive.
It is generally considered good etiquette if you are going to talk about someone in a post to ping that person to the post. The difference between demand and quantity demanded is fairly simple, yet for some reason misunderstood. It is also a critical distinction if one is to understand the law of demand and how it relates to price. I believe that part of the reason that it is so misunderstood is because it is so often misrepresented in the media by ignorant reporters whose editors are also to ignorant to catch their errors. That is one reason that when I see a reference to changing prices causing a change in demand I try to point out the error of that statement. That is not gobbledygook, but is in fact simple economic truth. Thanks for your contribution to the discussion. In fact, I'm sure your "I jist don't be gittin' it no mo'" illustration cleared it up for anybody who was still confused. Dr. Thomas Sowell and Dr. Walter Williams couldn't have said it any better.
Dr. Thomas Sowell and Dr. Walter Williams couldn't have said it any better.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Oh, I think either one could have probably said it better, I am certain that either one could have illustrated whatever you are trying to say in a much better way than you have done and without all the unwarranted arrogance.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.