Short term, building out a deep global oil demand reduction that [image-nocss] would add impetus to the downward oil price trend, it may well be that gasoline prices will soon hit bottom. The Organization of Petroleum Exporting Countries (OPEC) looks forward, realistically or not, to a tighter supply-demand scene and stabilized or rising oil prices. The seasonality of world oil consumption would weigh in favor of this, at least a little. More importantly, the much lower retail prices will encourage gasoline demand to shrink less, or cease shrinking.
No one knows at which precise point falling prices would cause demand to stop shrinking, or to grow. Whenever that might be, it will be within the context of how the overall economy is performing. If lower gasoline prices continue and are accompanied by improvement in the U.S. economy, gasoline demand growth can be expected to revive. For demand and for the industry, the light at the end of the tunnel may be twinkling but may not be brightly visible for months.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.