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Report: Gas Demand to Drop Off in Next 5 Years

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February 12, 2014 by   Leave a Comment

Over the next five years, U.S. demand for gasoline is poised for a cumulative drop of 700,000 barrels per day, and the pace of that demand destruction is likely to accelerate after the year 2020, according to strategists at Bank of America Merrill Lynch.

MarketWatch reported that the gasoline market faces a growing supply-and-demand gap, they said in a note dated Wednesday (Feb. 12). “Despite a small rebound in consumption last year, stocks are ample and demand faces a big structural decline in the years ahead,” the strategists said. “Making matters worse, U.S. gasoline output jumped 9.1 million barrels a day in 2013, a near-record level, and may grow this year too.”

They characterized gasoline demand as continuing to be “challenged” this season “and for years to come,” as improvements in vehicle fuel efficiency offset any growth in the amount of miles driven.

The latest report from the Energy Information Administration showed that over the last four weeks, motor gasoline product supplied, which offers an indicator for demand, averaged about 8.4 million barrels per day, down by 1% from the same period last year.

“A stagnating vehicle fleet size, rising fleet turnover and higher fuel efficiency standards of new cars will lead to faster deterioration in gasoline demand going forward,” the B.of A. Merrill Lynch strategists said. “High fuel prices will also further promote a switch to smaller cars.”

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