I’ve been wondering about the long and short term prospects for gasoline. We’ve seen prices plunge and if the Detroit Auto Show is any indication, one might think we’ll all be driving hybrids and pure electrics within 5-10 years. What’s more, a green-friendly president moves into the White House next Tuesday to work with a Congressional majority which feels the same way.
Any de-emphasis on gasoline has major implications for engineering and the economy. Indeed, “alternative energy” will be the central topic at the IEEE’s upcoming annual meeting in February. Yes we’re in a recession, but I believe the economy is on the verge of going through major dislocations with gasoline and automobiles leading the way. Indeed, I said that about automobiles in a previous blog post.
U.S. gasoline sales have shown signs of decline for several years. Average daily gallons sold between 2004 and 2005 dropped 9.3 per cent from 63,830,000 to 58,388,000, according to the Energy Information Administration which is part of DOE. Gasoline rebounded slightly in 2005 and 2006, but fell sharply in 2007. Last year has been tallied only through October with ten months averaging out to about 55.45 million gallons a day or almost two million less than 2007.
U.S. gasoline production fell by 1.08 per cent last year from 468 million barrels to about 463 million although we consume gasoline refined outside the U.S. too. Production only roughly reflects consumption, but it provides more evidence of decline. Miles driven which obviously mirrors gasoline consumption is another indicator. It declined by 100 billion miles or 3.5 per cent between November 2007 and October, 2008, according to the Federal Highway Administration.
These indicators all point to a rocky road ahead for gasoline. The central question is whether these declines will they linger after the recovery commences (recovery can’t come too soon!). Gasoline consumption did not fully recover from the `Tech Wreck’ recession that lasted into 2004 and for sure, 2009 looks dismal for oilmen, seismologists, oil engineers, refiners, chemists, gas station attendants and millions of others touched by this industry.
There are many implications for engineers especially those in the auto industry, but I am going to ponder them for a bit. What do you think? john.dodge@reedbusiness.com
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