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Demand for Gas Continues Decline

January, with its bad economics and bad weather, was a slow month for gasoline use, according to AAA's regular survey. Citing the Federal Highway Administration, AAA said people in this country drove fewer miles for the 13th consecutive month. That decline in demand is likely to continue in February.

The price of gas nationwide was $1.85 a gallon, according to AAA's weekly report. It held pretty steady after three straight weeks of slight increases. In the Washington area, the average price last week was $1.84, up from $1.81 the previous week, but not bad considering that a year ago it was $2.95.

AAA-MidAtlantic notes that the U.S. Department of Energy reported gasoline demand down 1.7 percent from last January, with inventory going up.

"The recent strength in the prices of both oil and gasoline remain somewhat surprising to industry analysts and American drivers," John B. Townsend, AAA Mid-Atlantic's manager of public and government affairs, said in a statement accompanying the report. "The explanation for such seems to be based on the expectation that OPEC and U.S. refineries will both be able to cut output enough to bring supply and demand into balance over the next few months."

But the refiners can't control how much you drive, Townsend noted.

Recent signs of the downturn in driving:
As Metro prepares its budget for next year, planners note a decline in parking revenue at the lots and garages. That comes despite an increase in ridership on the trains. The transit authority figures that people are finding alternatives to driving alone in order to reach the stations.

The Maryland Transportation Authority's January decision to raise revenue in part by setting a monthly fee for E-ZPass accounts was based largely on a decline in toll collections during the past year.

By Robert Thomson  |  February 2, 2009; 8:31 AM ET
Categories:  Driving  
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If demand is down, why is the price going up??? This kind of economic system doesn't work. It didn't work with Metro, it didn't work for the last eight years, who thinks it's going to work now?

Law of supply and demand. There's little demand thus leading to larger supply. These supplies can spoil so they charge more? Ok, fine, I'll continue to not drive long distances. No problem gas companies.

Posted by: dj1123 | February 2, 2009 9:47 AM | Report abuse

Demand is down, but supplies are down too as refiners cut production. If refiners cut supply, then the price will go up, but of course they will sell less fuel because they have less fuel to sell. So do they sell more fuel cheaper, or do they sell less fuel more expensive? There is an equalibrium point which will ensure that supplies are tight enough such that the price doesn't fall too low, supplies are plentiful enough to ensure that enough volume is sold, and thus profits are maximized.

Posted by: thetan | February 2, 2009 10:20 AM | Report abuse

Something doesn't add up here. E-ZPass fees will be jammed down Maryland account-holders' throats for the official reason that the back-office contractor operations are getting exponentially more expensive because well the State is a victim of it's own success - many more accounts need to be processed, and it's costing the State more to contract out the service that posts E-ZPass transactions that out. But now the explanation is instead that the fees are being passed on as a manner of recouping lost tolling revenue??! That plain smells like last week's tuna salad.

Posted by: chumbucket | February 2, 2009 2:10 PM | Report abuse

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