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Demand for Gasoline Falling as Prices Rise

But does that signal a new recession?

by on May.05, 2011

Americans appear to be cutting back fuel consumption as prices approach record levels.

With fuel prices nearing the politically significant $4 a gallon level, industry watchers report that gasoline consumption has begun to slow.

The question is whether motorists are simply reining in their time behind the wheel through careful route planning – or whether the decline signals the start of a new recession, as fuel consumption is often linked to spending in other areas of the economy.

Gas consumption has dropped by more than 1.2%, year-over-year, during the last four weeks, according to data tracked by MasterCard SpendingPulse.

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The nation is using 13% less gasoline – about 1.2 million barrels a day – than it did in 2007, when consumption peaked.

Analysts say much of that was due to the recession, the jobless no longer needing to commute, but studies have shown that U.S. drivers are also taking steps to reduce driving by such things as route planning before running errands.