A Look Back at Gasoline Consumption During 2020
Last September, we considered the most interesting chart of 2020: U.S. gasoline consumption. The trend lines said a lot about a year full of extremes.
Specifically, the data provided three important takeaways:
- The gasoline consumption data is especially timely and robust, considering that there are not many publicly available, economy-wide data series reported weekly since 1991.
- Gasoline consumption is a valuable proxy measure of economic and social activity.
- Gasoline consumption data also correlates with ethanol blending, ethanol production, and corn usage, since ethanol can only be blended into gallons of gasoline consumed.
In March 2020, gasoline consumption (as reported by the U.S. Energy Information Administration) plummeted to the lowest levels in 29 years. Consumption began to recover in late April before stalling around 8.7 million barrels per day in late June and July 2020.
The Good: Consumption Is Back to “Normal”
So, where are we now? Let’s review 2021 gasoline trends.
Figure 1 shows U.S. weekly gasoline consumption for 2021 (in orange), 2020 (in yellow), and the average of 2015-2019 (in blue). Figure 1b shows the same data but skews the axis scale for a closer look.
Figure 1b. U.S. Weekly Supplied Motor Gasoline (Implied Consumption). (Scale Skewed to Show Detail). Data Source: U.S. EIA.
For the week that ended May 14, 2021, gasoline consumption reached 9.2 million barrels per day (mbpd), the highest since the pandemic.
Throughout 2021, gasoline consumption followed a pattern of jumping higher, followed by a brief retreat, then turning higher again. For example, consumption reached 9.1 mbpd in April before slipping to 8.8 mbpd in early May.
What causes these swings? First, it could be adjustments in economic and social activity. Second, it’s important to recognize these data are actually motor gasoline supplied, which is then implied as consumption. This is to say, inventory and delivery factors could also be a factor.
While total gallons of gasoline consumed recently hit a high of 9.2 mbpd, conditions were closer to “normal” in April 2021. Figure 2 shows 2020 and 2021 consumption as a share of the 2015-2019 average. In April, consumption was 98% of pre-pandemic levels. This is because gasoline consumption has a seasonal pattern of increasing during the summer months.
Figure 2. 2020 U.S. Motor Gasoline Supplied as a Share of 5-Year Average. Data Source: U.S. EIA.
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The Bad: Gasoline Prices
From mid-March through the end of April, the price of regular gasoline was an average of $2.85 per gallon. In the last two weeks of data, however, prices exceeded $3.00 per gallon.
Note that gasoline prices turned higher – above levels observed throughout 2020 – well before the Colonial Pipeline hacking concerns in early May.
For some context, U.S. gasoline prices were last above $2.80 in June of 2019 and above $3.00 in October 2014. But – gasoline prices above $3.00 per gallon aren’t uncommon. In fact, 34% of weekly observations since January 2010 have been above $3.00 per gallon. Click here to read an in-depth analysis of gasoline prices at AEI Premium.
Figure 3. U.S. Gasoline Prices, Regular – All Formations. 1991- May 2021. Data Source: U.S. EIA.
At the risk of potentially overusing an idea we’ve shared frequently, most of the gasoline shock has come from the whiplash of prices over the last year.
Throughout 2021, prices have turned higher and set the stage for several eye-catching facts:
- Gasoline prices approach $3 per gallon.
- Gasoline prices last exceeded $3 per gallon in October 2014.
- Gasoline prices in May 2021 are up 60% from a year ago.
Wrapping It Up – Gasoline Trends to Watch
The last year has obviously been a bumpy ride across all sectors of the economy. Energy markets have not been immune. Where do we go from here?
On the one hand, gasoline consumption approaching normal is a positive development for the economy. On the other hand, higher gasoline prices have captured much attention as concerns about inflation increase. Looking ahead, both measures will be important to monitor.
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The last economic contraction – The Great Recession – corresponded with a multi-year contraction in U.S. gasoline consumption. However, we’re already anecdotally seeing a surge in domestic travel as families seek vacation destinations within driving distance.
Memorial Day Weekend is the unofficial start of summer, the busiest travel season. Will gasoline consumption surpass levels seen in 2019? How high will gasoline prices go?