The decline in gasoline prices requires a “tangible” and “lasting change,” says the analyst

A drop in US gasoline consumption could be a continuing trend, according to an analyst.

“There has been a noticeable, and I think lasting, shift toward lower gasoline demand,” Andy Lipow of Lipow Oil Associates told Yahoo Finance.

The analyst noted that demand for motor fuel peaked at just over 9.3 million barrels per day between 2017 and 2019, according to US Energy Information Administration (EIA) data.

The lockdowns during the pandemic impacted demand in 2020 and 2021. However, the 2022 level was 0.5% lower than the previous year. The information on gasoline demand in 2023 is thus far behind that of 2022.

“That’s partly because of early retirements,” Ed Morse, Citi’s head of global resource research, told Yahoo Finance. “That’s it [also the case in part because of changing work habits on how many days people go to work.”

Many workers who used to commute five days a week, now drive less. The meteoric rise in energy costs in 2022 also impacted demand as gasoline prices surged past $5 per gallon last year.

“Not only has working remotely impacted on Americans driving habits, but the higher cost of gasoline has caused the consumer to drive a bit less. Combined with increasing availability and sales of electric vehicles at the expense of gasoline-powered cars, I expect that gasoline demand will continue to decline about 1.0 [%] percent annually in the next few years,” said Lipow.

Diesel demand is also down, which Citi’s Morse attributes to “trucks getting a little greener, and also because volumes may just have gone down. This could be part of the slowdown that everyone is talking about,” he said.

Gasoline usage is seasonal and is expected to come in spring and summer. Drivers will see prices go up above its current level of $3.36 per gallon.

China is in recovery mode from its lockdowns, and some analysts expect the cost of oil and refined products to rise as that economy increases its energy use.

The story goes on

Lipow predicts $3.65 for the summer driving season, adding, “According to my tarot cards, I don’t see the national average for gas reaching $4.00 a gallon.”

On Wednesday, Brent futures (BZ=F) fluctuated above $84 a barrel, while US West Texas Intermediate (CL=F) crude oil traded above $77 a barrel.

Ines is Senior Business Reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre

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