NEW YORK/WASHINGTON (Reuters) - Higher gasoline prices have cut demand in the United States to the lowest level for the month of January since 2001, data for from the Energy Information Administration (EIA) showed on Monday.
Total U.S. oil demand fell almost 4.5 percent in January from a year earlier, the statistical arm of the Department of Energy said in its Petroleum Supply Monthly report, declining by 853,000 barrels per day to 18.27 million bpd.
The number was revised slightly higher by 169,000 bpd from an earlier estimate, but still illustrates the outsized impact rising prices have had on demand in the world’s largest oil consumer, despite a modest recovery in the U.S. economy.
Gasoline demand fell 225,800 bpd to 8.19 million bpd, the lowest January demand in more than a decade. The figure was revised slightly higher from the previous demand estimate of 8.06 million bpd. Month-on-month gasoline demand was down by 472,500 bpd from December.
The latest data means U.S. gasoline demand has fallen by nearly 700,000 bpd since January 2007.
“We’re looking at a new era,” said Phil Flynn, analyst at PFGBest in Chicago.
“There has been long-term demand destruction since the financial crisis that simply isn’t coming back.”
The average price for gasoline at the pump rose to $3.40 a gallon in January 2012, up by more than 30 cents on last January due to higher crude prices, the EIA said.
Gasoline prices have continued to rise since then, despite the fall in demand, hitting an average of $3.88 at the end of March, according to data compiled by MasterCard.
Demand for distillate fuels, which include diesel and heating oil, was also lower, falling by 157,700 bpd or 4 pct on January last year to 3.81 million bpd.
International benchmark Brent crude oil, the price most commonly used by East Coast and Gulf Coast refiners, averaged around $110 a barrel in January 2012 compared with $100 in the same month last year.
Since then, it has rallied to more than $125 a barrel due to tensions with Iran over that country’s nuclear program, with some saying prices could rise more as U.S. summer arrives and more drivers take to the roads.
A report published by Credit Suisse on Monday showed the price of crude oil now makes up 72 percent of what U.S. consumers pay for gasoline at the pump, compared with an average of 51 percent between 2001 and 2009.
As crude prices have risen, taxes have fallen to 11 percent of the total U.S. consumers pay compared with an average of 22 percent in the last decade. Refining and marketing margins have also been squeezed, falling to a combined total of 17 percent from 27 percent.
“A legitimate worry now is that prices won’t retreat much,” Credit Suisse analyst Jan Stuart said.
“Indeed, normal seasonal trends strongly argue in favor of second and third quarter oil prices reaching some 10 percent above those prevailing in the first quarter.”
Brent crude oil rallied by $2.55 on Monday to settle at $125.43 a barrel.
Reporting by David Sheppard and Timothy Gardner; Editing by David Gregorio and Alden Bentley