U.S. gasoline demand remains high with expectations for consumption this year to tie 2016’s record.
Even while SUV sales continue to dominate the U.S. market, there is promising news on the alternative vehicle front. Sales of electric vehicles (EVs) continue to climb, with purchases in 2017 growing by more than 20 percent year-over-year (y-o-y). Observers expect even higher penetration rates in the coming decade as greater model availability and falling battery costs continue to stimulate consumer demand. Less promising is the fact that sales of SUVs and other light trucks now make up two out of every three vehicles purchased in the United States. U.S. gasoline demand remains high with expectations for consumption this year to tie 2016’s record.
Electric vehicle sales are on the rise
The outlook for EVs in 2018 is positive because of the extension of the $7,500 federal tax credit, competitive pricing among EV models, improvements in range, and rising gasoline costs. The optimistic environment comes after a record-breaking 2017, with sales nearing 200,000 units, an increase of approximately 22 percent y-o-y. The year was punctuated by a stellar fourth quarter as consumers were enticed by a wide range of affordable vehicle options.
Light truck sales increase market share
Nearly 12 million light truck sales accounted for 67 percent of the light-duty vehicle market in December.
U.S. light truck sales continue to surge, thanks to relatively low gasoline prices helping turn consumers toward larger and less fuel-efficient vehicles. Nearly 12 million light truck sales accounted for 67 percent of the light-duty vehicle (LDV) market in December, up five percentage points from the same time in 2016. According to the latest data from the Bureau of Economic Analysis, total LDV sales—seasonally adjusted at annual rates—fell by 300,000 versus December 2016, but remained high at 17.8 million. Although light truck sales are robust, the growth rate has been slowing. U.S. sales grew 12 percent y-o-y in 2015, 7 percent in 2016, and 4.5 percent in 2017. Sales of light trucks fell to as low as 47 percent of the U.S. market in February 2012.
Gasoline demand remains near all-time highs
U.S. gasoline demand in 2018 is expected to match the 2016-17 average and hold steady at 9.3 million barrels per day (mbd) as a result of strong economic growth. June is poised to average near record-setting levels at 9.7 mbd, and summer demand, EIA projects, should be approximately 82,000 barrels per day (b/d) above the 2007-16 range. Total petroleum demand is also expected to remain strong and surpass 20 mbd again on an annual basis, the first time since 2007.
Mixed news on consumer gasoline spending
Gasoline spending topped $294 billion in Q3, an increase of $28.5 billion y-o-y.
U.S. gasoline and other motor fuels spending increased y-o-y throughout 2017, reflective of rising gasoline prices and continued high demand. Spending topped $294 billion in Q3, an increase of $28.5 billion y-o-y. The large increases come after sharply reduced expenditures in 2015-16 following the decline in domestic gasoline prices by more than $1 per gallon at the pump. Much of those savings have now been reversed by the rise in global crude prices throughout 2017, which was largely the result of OPEC’s production cuts. The website GasBuddy.com estimates consumers will spend an additional $25 billion on gasoline expenditures this year compared to 2017.
SUV fuel economy improves
SUVs have become more efficient over the past decade, thanks in large part to stricter CAFE standards.
As SUVs have become more efficient over the past decade, thanks in large part to stricter CAFE standards put in place in the 2007 the Energy Independence and Security Act (EISA) and further tightened in 2012, the increased fuel economy has kept gasoline demand from rising higher than current levels as vehicle miles traveled have surged. Some of the most popular models have improved their efficiency by 37 percent in the past ten years.