(John Kemp is a Reuters market analyst. The views expressed are
* Chart 1: tmsnrt.rs/2hhZURB
* Chart 2: tmsnrt.rs/2gjOf6Y
* Chart 3: tmsnrt.rs/2gk1CnF
* Chart 4: tmsnrt.rs/2hi0AGi
* Chart 5: tmsnrt.rs/2gjQNlB
* Chart 6: tmsnrt.rs/2gjOqiE
By John Kemp
LONDON, Dec 7 U.S. gasoline consumption has been
growing at the fastest rate for more than a decade as lower fuel
prices and an expanding economy have combined to produce a big
increase in demand.
OPEC is relying on continued growth in U.S. gasoline
consumption, as well as other fuels, coupled with faster growth
in demand from emerging markets, to help rebalance the oil
market in 2017.
Gasoline demand depends on continued GDP growth in the
United States, where the expansion is becoming increasingly
mature, and the transition to a new administration has injected
a source of uncertainty.
But gasoline demand will also likely be influenced by the
course of gasoline prices, which are now rising rather than
In the last two months, U.S. retail gasoline prices have
risen year-on-year for the first time since the oil slump began
in mid-2014 (tmsnrt.rs/2hhZURB).
The impact of earlier sharp price falls between 2014 and
early 2016 on gasoline consumption in the United States may
start to fade in 2017.
In that case, OPEC may have to rely more heavily next year
on growing demand for other fuels, such as distillate and jet
fuel, and emerging markets.
Gasoline consumption is projected to have risen by around
130,000 barrels per day (bpd) in 2016, according to the latest
estimates from the U.S. Energy Information Administration
("Short-Term Energy Outlook", December 2016).
Consumption growth has slowed to around half the blistering
260,000 bpd rate reported in 2015, but building on a higher
baseline, with back to back gains pointing to the underlying
strength of fuel demand.
Consumption has jumped by almost 400,000 bpd, or a compound
annual rate of nearly 2.2 percent, during 2015/16, according to
EIA estimates (tmsnrt.rs/2gjOf6Y).
Compound growth of 2.2 percent in 2015/16 may not seem like
much but it would be the fastest two-year growth rate since
2001/02 and before that 1998/99.
All three periods of exceptionally strong gasoline
consumption growth were marked by a combination of economic
expansion and low fuel prices.
Employment gains as well as increased leisure driving and
the choice of vehicles with larger engines that get fewer miles
per gallon have all boosted fuel use, offsetting the underlying
improvement in fuel-efficiency for all vehicle models.
EIA is currently forecasting gasoline consumption growth
will slow to just 60,000 bpd in 2017, though that figure could
be substantially revised, with changes to both growth and the
Gasoline demand forecasting is subject to an enormous amount
of uncertainty, illustrated by the big revisions to the forecast
for 2016 since the start of the year (tmsnrt.rs/2gk1CnF).
But the most recent high-frequency data from EIA on gasoline
consumption show it continuing to increase more than 2 percent
year on year in September (tmsnrt.rs/2hi0AGi).
Separate data on traffic volumes from the Federal Highway
Administration show the number of miles driven has continued to
increase steadily at more than 2 percent year on year (tmsnrt.rs/2gjQNlB).
Vehicle-miles driven have been rising at the fastest rate
since the turn of the millennium, in contrast to the sluggish
growth or decline reported between 2005 and 2014 (tmsnrt.rs/2gjOqiE).
Gasoline consumption may be more responsive to price changes
than previously thought according to the latest econometric
research ("Anticipation, tax avoidance, and the price elasticity
of gasoline demand", Coglianese et al, 2015).
"U.S. gasoline consumption has been rebounding at a rapid
pace," economists Christiane Baumeister and Lutz Kilian wrote in
a paper earlier this year ("Lower oil prices and the U.S.
economy: is this time different?" 2016).
"This rebound started well before the sharp decline in oil
and gasoline prices in the second half of 2014, but the latter
price decline undoubtedly contributed to the sustained growth in
Growing U.S. gasoline consumption has played a small but
important role in helping the global oil market rebalance
following the price slump.
Without the accelerated growth in U.S. driving and fuel
consumption, the oil price slump would have been much deeper.
(Editing by David Evans)