THE MYTH OF FALLING GASOLINE DEMAND
One of the oil industry’s favorite talking points in its campaign to repeal the Renewable Fuel Standard (RFS) is the argument that “gasoline demand is falling,” and thus refiners have fewer gallons of gasoline in which to blend increasing volumes of ethanol. They claim that the purported drop in gasoline consumption has expedited the arrival of the so-called E10 “blend wall,” and that the only solution is to pull the plug on the entire RFS program.
Oil and gas champions in Congress have happily adopted this narrative. On Nov. 3, Rep. Barry Loudermilk (R-Ga.) proclaimed at a House hearing that the RFS should be repealed because “demand for gasoline is decreasing.” A day later, a letter to EPA from anti-RFS House members (secretly written by a lobbyist for a major oil company) suggested that the Unites States is experiencing “shrinking gasoline demand.” Even EPA has perpetuated the notion, with a senior official telling RFA National Ethanol Conference attendees in February that “we have to address declining gasoline demand.”
But there’s one little problem with this weary storyline: it simply isn’t true. Gasoline demand has actually been rising steadily since 2012, hitting historically high levels this past summer. In fact, monthly gasoline consumption in August 2015 (a whopping 145.1 billion gallons annualized) was the highest since July 2007 and the seventh highest since EIA began keeping monthly records in 1945. What’s more, EIA projects annual gasoline consumption in 2016 will be the highest in nine years.