Lower gasoline prices in 2015 pull back U.S. vehicle fuel economy gains
U.S. gasoline consumption last year reached its highest volume in almost a decade, but more fuel-efficient vehicles will keep demand from setting new records, the U.S. Energy Information Administration (EIA) said.
Gasoline demand last year averaged 9.2 million barrels per day (bpd), its highest volume since 2007 and a 240,000 bpd increase from the previous year, according to the EIA. The agency expects consumption to increase another 70,000 bpd next year, according to its latest Short Term Energy Outlook.
Sharply lower retail gasoline prices helped boost U.S. demand. Retail prices averaged USD 2.43 per U.S. gallon (USG) in 2015, lower by 93 cents/USG from the previous year. EIA expects gasoline prices to drop another 40 cents/USG to average at USD 2.03/USG in 2016, which would be the lowest average since 2004.
Vehicle fuel efficiency will curb continued fuel consumption growth in 2016, the agency said. Average fuel economy of new vehicles sold in 2007 hovered near 20 miles per gallon during that record consumption year, compared to more than 25 miles per gallon average in 2015, according to data from the University of Michigan Transportation Research Institute.
But fuel efficiency also went backward for the first time in seven years, the data showed. Fuel economy for new vehicles sold ended the year lower than in 2014, as lower gasoline prices led consumers to pay less attention to fuel efficiency ratings.
Gasoline was not the only fuel facing potential pressure from fuel efficiency. The EIA expects improving aircraft fleet fuel economy to reduce jet fuel consumption to fall by approximately 10,000 bpd to 1.53 million bpd in 2016 before recovering the following year.
Distillate fuel sales last year fell by 80,000 bpd to 3.96 million bpd. Lower heating oil demand dragged down consumption. The EIA expects distillate demand to restore that consumption within two years.