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Commentary By Thomas Triedman

The Falling Demand of Gasoline

Economics Finance

A few weeks ago, drivers’ demand for gasoline (measured by the four-week average, shown by the black line) dipped below pandemic levels — when travel and business restrictions were still in effect — and is over one million barrels below normal pre-Covid levels. Even though gas prices are falling quickly, they are still at elevated levels, potentially causing Americans to opt for other forms of transit or simply move around less. But there is a more worrisome explanation for this drop in demand: Consumer sentiment is so low, and budgets are so constrained by inflation, that people are taking fewer trips, going to fewer restaurants, and simply doing less. Regardless of the cause, gasoline futures fell 11 percent in response to signs of weakening demand, a move that might help bring retail gas prices even lower. Real-world data like this will become increasingly helpful for economists and market participants as they try to get a sense for the strength of this economy.  

Source: EIA

Thomas Triedman, a sophomore at Yale, is a Summer 2022 Collegiate Associate at the Manhattan Institute

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