In the Fort Worth Star-Telegram, Jim Fuquay reports that energy consumption is down sharply:
Less gasoline. Less jet fuel. Less crude oil. Less natural gas. Less electricity.
At the end of 2008, Americans were getting downright stingy with their energy use. Between wildly volatile energy prices and a deepening recession, Americans are curtailing their renowned reputation for energy consumption in what some believe could be a long-term trend.
The economists’ term for it is “demand destruction.” This year’s poster child is driving, as the number of miles driven is showing the biggest drop since the federal government started keeping the statistic.
Between November 2007 and October 2008, Americans drove more than 100 billion fewer miles, a drop of more than 3 percent. The decline was greatest late in the year, with September falling 7 percent and October 4.5 percent.
The result? Gasoline consumption plunged 8.5 percent in September and was down 4 percent in mid-December, the latest figure available from the federal Energy Information Administration.
And jet fuel consumption is down, natural gas consumption is down, electric power consumption in ERCOT is down, and so on. And not just in the U.S.–the International Energy Agency “expects global oil demand for all of 2008 to show a decline for the first time in 25 years,” said Fuquay.
Some analysts quoted in the story conclude that high and volatile energy prices in 2007 and 2008 may represent a turning point in attitudes and bring about a permanant shift in demand, others are reported to be not quite ready to make that call.
My general sense of it – and usually about here I should say that I am not a forecaster, nor do I play one on TV – high prices likely induced more consumers to buy more economical durable goods, and this now-more-economical stock of durable goods will shift energy demand lower. This shift will tend to be undone over time as long as prices remain relatively low. (However, macroeconomic conditions and constraints on borrowing may be limiting the degree to which consumers are making durable goods purchases at present, leading to a smaller than otherwise expected rebound in energy demand.)