American drivers are starting to buy less gasoline as they feel the economic burden of record prices that continue to hover near $5 a gallon.In the first full week of June, gasoline sales at U.S. stations were down about 8.2% compared with the same week last year—the 14th consecutive week that sales have lagged behind 2021 levels, according to surveys by energy-data provider OPIS.
In the week ended June 10, the Energy Information Administration’s measure of implied demand—an estimate of products supplied to consumers—declined by roughly 110,000 barrels a day from the prior week, to about 9.1 million barrels a day. That figure is down from about 9.4 million barrels a day the same time last year.
Drivers have begun consolidating trips or filling up their tanks with only as much fuel as they need to get by for a few days. Some are carpooling or taking mass transit, while others are working from the office for fewer days each week, analysts said.
Average U.S. gasoline prices edged down from above $5 a gallon to about $4.97 a gallon Tuesday, coinciding with a decline in gasoline futures on investors’ concerns that high prices will hit demand, analysts said.
“You have to have some demand destruction to give supply a chance to catch up,” said Tom Kloza, global head of energy analysis at OPIS, which is part of Dow Jones & Co., publisher of The Wall Street Journal.
The current softening of demand is minuscule compared with 2020’s historic fuel-market collapse, when widespread economic lockdowns at the onset of the coronavirus pandemic kept millions home. But it demonstrates that consumers are beginning to temper fuel purchases in response to the historically high prices—particularly with gasoline.
Musicians at Philadelphia’s Dare to Imagine Church recently asked to cut rehearsals from two days a week to one day to save on gas. Khrista White, the church’s creative worship director, who lives in Ewing, N.J., and drives roughly 70 miles round trip in a Jeep Liberty, said most of the musicians drove a truck or SUV to haul instruments and equipment. The church has begun providing gasoline cards to help them cover fuel costs.
“That’s a gas guzzler right there,” Ms. White said. “It was hurting our pockets.”
Purchases of diesel, which in the U.S. is used primarily for trucking and heavy industry, show less demand impact despite even higher fuel prices. But some diesel drivers say they are also reducing their consumption as high fuel costs make business less profitable.
Freight rates haven’t kept pace with rising diesel prices, leaving truck owner and operator Joe Ehrlich in a bind far from home. Mr. Ehrlich has been “deadheading”—driving without a load—on the East Coast, unsure of whether he can pick up enough jobs to cover costs back to Spokane, Wash. Less than a year ago, hauling a load covered fuel costs for the return trip, he said.
Gasoline prices have climbed to record levels in part because U.S. refineries have reduced their capacity by about 800,000 barrels a day since before the pandemic began. The Biden administration has tried to urge the U.S. oil industry to make more fuel, but with existing refineries running near capacity, there is little that can be done short-term to ease the supply gap, analysts said.
With inflationary pressures pushing up prices for many consumer goods, and wages not keeping pace, consumers are ill-equipped to handle a prolonged jump in fuel prices, said Garrett Golding, a business economist at the Federal Reserve Bank of Dallas. While U.S. economic activity hasn’t yet taken a direct hit, higher prices of $5.50 a gallon or more wouldn’t likely be sustainable for an extended period, he added.