U.S. Driving Activity to Reach All-Time Highs But Gasoline Consumption Seen Flat

Driving activity in the United States will reach all-time highs this year and next, the Energy Administration said on Tuesday in its latest editing of the Short Term Energy Outlook.

Vehicle Miles Traveled (VMT) will increase in 2024 and 2025 to new highs in the United States, the EIA said, with trends in population, economic growth, and especially employment all increasing. The EIA changed is employment growth forecast for this year by 1% compared to the previous month’s STEO forecast—an increase of .8 million jobs from the prior estimate.

This driving activity record and vehicle fuel efficiency gains are largely expected to cancel each other out, the EIA has predicted, keeping gasoline consumption “relatively flat through 2025.”

“When indexed to 2019, we expect 2% more U.S. VMT in both 2024 and 2025 compared with 2019. We forecast average U.S. miles per gallon will grow even faster, with 5% more in 2024 than in 2019 and 2025 being 6% higher. Our consumption model captures trends in increasing average fuel efficiency, such as those related to increasing corporate average fuel economy standards and the increasing use of electric vehicles. As a result, U.S. motor gasoline consumption will be about 4% less in 2024 and 2025 than in 2019,” the EIA said.

Retail gasoline prices are expected to average $3.48 per gallon this year, and $3.45 next year, the EIA forecast—almost 20 cents/gal higher on an annual average basis this year compared with the February STEO, on the back on higher crude oil prices. This compares to an average of $3.52 last year and an average $3.97 in 2022.

The EIA expects that “nominal gasoline prices from May through July will exceed prices for those same months in 2023.”

By Julianne Geiger for Oilprice.com

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