Is U.S. Oil Demand Heading Higher?
Source: Investopedia, Eric Fox (9/30/09)
"The [FHA] report for July 2009 shows that travel on all roads and streets increased by. . .2.3% on a YOY basis."
The Federal Highway Administration (FHA) released its monthly report on travel trends on U.S. highways, including total miles driven. The report for July 2009 shows that travel on all roads and streets increased by 5.3 billion miles, or 2.3% on a year-over-year basis. The report said that year-to-date in 2009 the amount of miles driven is about flat with 2008. This was the second straight monthly increase, and three out of the last four months have seen positive increases.
This is important news for the energy sector, as the largest use of crude oil in the U.S. is for transportation. In 2008, 71% of oil use in the U.S. was for transportation. The total number of miles driven started to flatten out in 2007 due to the high price of crude oil and gasoline. It then plunged as the recession and financial crisis hit the country.
Although the market tends to focus on emerging markets, U.S. drivers alone consume more barrels per day of oil for gasoline use than all of China uses for everything. In June 2009, 9.2 million barrels per day were used in the U.S. This equates to 387 million gallons per day.