Demand For Gasoline Dropping In The US

An Associated Press article in yesterday's newspapers made the announcement that demand for gasoline in the US is declining and will continue to do so. Some of the decline is easy to account for, seeing that the economy is still sluggish and demand is off because of it. Rising oil prices also has something to do with it as well. But some of the other reasons for the decline, past and future, sound more like propaganda rather than being based on facts. Let's take a look at a few.

By 2022, the country's fuel mix must include 36 billion gallons of ethanol and other biofuels, up from 14 billion gallons in 2011. Put another way, biofuels will account for roughly one of every four gallons sold at the pump.

Today 'biofuels' means ethanol as it is the most prevalent one out there now. And while many have touted it as a means of reducing our dependence on foreign sources of oil, the truth is that it does no such thing. Corn-based ethanol is a loser, literally. It takes more than a gallon of fossil fuel to produce the ethanol equivalent of a gallon of gasoline. That's a net loss right off the top. Ethanol has half the energy of an equivalent volume of gasoline, meaning a gallon of gas with a 10% ethanol content will give only 95% of the fuel economy of 100% gasoline. With a call by the EPA to increase the the ethanol content to 15%, fuel economy will suffer even more and the motoring public will pay more for less, both directly and by tax subsidies, always a losing proposition.

Other biofuels are still waiting in the wings but aren't viable yet, whether it's cellulose-based ethanol, algae-based diesel/gasoline, or some other fuel. None of these technologies are at the point where they can produce enough fuel economically and in large enough quantities to satisfy demand.

Starting with the 2012 model year, cars will have to hit a higher fuel economy target for the first time since 1990. Each carmaker's fleet must average 30.1 mpg, up from 27.5. By the 2016 model year, that number must rise to 35.5 mpg. And, starting next year, SUVs and minivans, once classified as trucks, will count toward passenger vehicle targets.

This might work, but only if people aren't forced into micro-sized vehicles that won't haul a family of four plus all their luggage while at the same time maintaining the safety levels of present day vehicles. It's been tried before and it didn't work. People still prefer larger vehicles. And for those of us in colder climes that measure annual snowfall in feet, AWD or 4WD rules. I don't know of any vehicles that will attain the kind of fuel economy being mandated that also have either AWD or 4WD. And while I have been able to do fair to middling with a front wheel drive car in the past, there have been numerous occasions when I really needed 4WD to get where I really needed to go.

The auto industry is introducing cars that run partially or entirely on electricity, and the federal government is providing billions of dollars in subsidies to increase production and spur sales.

I'm not sure where to start with this one.

One of the first things I think about is the total true cost of hybrid or fully electric vehicles in regards to their full life cycle. When one looks at the total energy costs of present day hybrid electric vehicles from beginning to end (manufacturing to disposal and everything in between), they cost far more than the 'monster' SUVs, even taking into account fuel costs.

Batteries are damn expensive and need will need to be replaced at least once during the lifetime of such vehicles. It's rare anyone needs to replace the fuel tank or engine in an internal combustion engine (ICE) powered vehicle. The support infrastructure doesn't exist to any great extent, particularly in regards to fully electric vehicles or plug-in hybrids. Government subsidies to buy or build these vehicles don't matter worth a darn if the infrastructure isn't there to support them.

In some states there isn't enough generating capacity to power all these new vehicles and there isn't likely to be any more coming online any time soon. Between the EPA, various state regulations and laws, and every watermelon environmentalist group out there, building new capacity – even renewable energy-based sources - is going to be difficult, if not impossible. So where is all this electricity going to come from? Nobody seems to know, and that's a question that must be answered in order to make these vehicles more attractive to motorists.

There are more questionable assumptions made in the AP article that I should address, but won't. However I will leave you with these two thoughts.

Will gasoline consumption in the US continue to decline? Or will it ramp back if/when the economy turns around?

Only time will tell.