In 2017, American gasoline consumption fell for the first time in five years, according to a new report by Bloomberg.
While it was a fall, the fall was quite small—government figures show that consumption was down by just 0.0006 percent compared to 2016. The demand reduction occurred in the first quarter, corresponding with the inauguration of President Donald Trump.
According to Bloomberg, illegal immigrants started driving less after Trump took power for fear of apprehension by immigration officers. Rising oil prices also contributed to lower demand. The average gallon costed $2.39 in 2017, versus $2.12 in 2016, Bloomberg said.
The Energy Information Administration (EIA) predicts that demand for gasoline will rise again in 2018. This year, Americans should fill their tanks with 9.33 million barrels per day, and by 2019, that number will rise to 9.4 million barrels per day.
A potential gas tax increase could challenge the EIA’s figures, however. Recently Democratic Senator Tom Carper of Delaware said that President Trump was floating the possibility of a fuel tax increase of 25 cents per gallon to pay for his new infrastructure plan. If enacted, this would be the first increase in the federal gasoline tax since 1993.
Last month, the U.S. Chamber of Commerce called for a modest increase in the federal fuel fee, because inflation and vehicle fuel economy have eroded its value since it was last raised back in 1993. Related: Oil Prices Head Lower As Crude, Gasoline Inventories Rise
“Increasing the fee by a total of $0.25 cents, indexed for inflation and improving fuel economy, would raise $394 billion over the next 10 years,” president and CEO Tom Donohue said.
Republican lawmakers have pushed back on the idea of raising the gas tax, but there are some who are apparently onboard, the Washington Examiner reports.
Republican chairman of the House Transportation and Infrastructure Committee, Rep. Bill Shuster of Pennsylvania, has recently called upon GOP colleagues to consider dropping their opposition to the tax hike.
By Zainab Calcuttawala for Oilprice.com
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Based upon my anecdotal evidence, in Southern California - arguably the most car dependent and the most miles driven area, the proliferation of EV's and hydrides is very evident and accelerating.
A friend just sold his Volt with 140k miles driven (over three years) and he used only 65 gallons of gas. His previous car was a Suburban - and thus he bought about 9,000 gallons of gas less, than he would have . . . . . or about 3,000 gallons a year reduction. He bought a new Volt . . . .
If we were to assume a more 'normal' driving and savings of say 1, 000 gallons/year/EV or hybrid, those numbers will be adding up to a pretty significant reduction of gas usage.
Peak-oil is closer than generally expected.
million barrels of gasoline daily, with 42 gallons to a barrel, total daily consumption would equate to 391,860,000 gallons of gasoline consumed daily. Applying the 25 cents tax to the daily consumption, ie .25 x 391,860,000, would generate $97,965,000 revenue daily or $357,572,250,000 billion dollars yearly would be added to the Interstate Trust Fund. Over a ten year period, over $3.58 trillion dollars would be added to the Trust Fund, not $350 million over a ten year period as Mr. Donohue's states. His numbers just don’t add up.
Furthermore, the elasticity of demand, as presented in the article, fails to consider two demographic factors both related to age-old age and youth.
An average of 35-40K people reach retirement age daily. Once retired, the person’s driving mileage drops considerably. Though anecdotal and not indicative, I drive less than 1,000 miles a year as opposed to the 14-15K miles a year driven when employed. Many elderly simply don’t wish to contend with driving to and shopping the “Big Box” stores for reasons of distance-having to drive into the city and suffering a car accident-, security-risk getting robbed or mugged. These same people are opting out for home delivery via AMAZON or the same big box stores they don’t want to contend with.
The demographic of youth, in particular Generation X’ers and Millennials, are getting driver’s licenses at an older age, in lower percentages than Baby Boomers and their average mileage driven is much less than Baby Boomers. This is attributed to the cost inherent in owning and operating a car, ie insurance, taxes, licensing, etc, and the introduction of ride sharing services Uber and Lyft.
Looks like Donahue is basically "spot on". The 25 cent tax would generate approximately $390 billion over ten years assuming the elasticity of demand remains level-a big/big assumption.
I apologize for my late night error.