Tapping the brakes on gas demand
Gasoline demand growth is slowing, not long after prices hit a record $3.23 a gallon, but it may be too early to call it a trend.
NEW YORK (CNNMoney.com) -- American motorists may have finally eased up on the gasoline habit.
After years of strong demand, despite record high prices, there's evidence that the rate of growth in gas consumption is easing. Whether last spring's spike above $3 made a difference, the recent credit worries have crimped demand or if the decline is merely a statistical blip remains to be seen.
But one fact is clear. Demand for gasoline in the United States grew just 0.4 percent in the latest four weeks from a year earlier, according to the Energy information Administration, which polls refineries and wholesalers to gauge the amount of fuel sent to filling stations, down from 1.4 percent growth just five weeks earlier.
The average rate of growth over the last decade or so is about 1.5 percent, according to the federal agency.
The American Petroleum Institute, an industry organization that also uses refining and wholesale numbers, said demand grew 0.6 percent in July from a year earlier, compared to 1.3 percent in May and a whopping 3.7 percent in June.
And MasterCard SpendingPulse, a research unit at the credit card company that estimates demand at the pump based on credit card purchases, said gasoline demand grew at a rate of 1.6 percent last week, down from growth of 4.3 percent six weeks ago.
While the trend seems fairly clear, experts gave a variety of reasons why demand growth may be cooling.
A drop in demand growth could mean cheaper prices at the pump, as traders have long cited strong demand in the U.S. as a main reason for high oil and gas prices.
Gas prices are of course closely watched by everyone who drives. But they also are a key part of the economy: At $3 a gallon, gasoline sales account for about 3 percent of the nation's total economic activity.
While average gasoline prices peaked at an all-time record of $3.227 a gallon back in May, according to AAA, at Tuesday's average of $2.78 they are still historically high.
The high prices could finally be curbing demand.
"People drove less because they thought they were having their collective pants taken down by the oil companies," said Tom Kloza, chief oil analyst at the research group Oil Price Information Service.
But like others, Kloza said to not put too much stock in the numbers.
"We just see fluctuations from week to week, I'm not ready to call it a trend yet," said Ron Planting, an economist at American Petroleum Institute.
Planting noted that despite the recent slowdown in growth demand is still up about 1.6 percent so far this year, up slightly from the previous two years.
Michael McNamara, director of research for MasterCard SpendingPulse, said the drop in demand growth is consistent with a slowdown in retail spending and the slowdown in the economy this year.
As for high prices curbing demand, "It has an effect, but I don't think there is one magic number," said McNamara.
At EIA, senior oil market analyst Doug MacIntyre said the demand growth numbers may appear small because last year demand was so high.
Also, MacIntyre said, the last month has seen either very hot or very wet weather across many parts of the country, and that may have kept people from driving more.