consider gasoline so expensive they would try to
reduce how much they drive, the median consumer
response was $4.00 per gallon. When asked how
expensive fuel would have to be for consumers to
seek an alternative to driving or drive drastically
less, they reported a median price of $4.70. As the
gap between actual prices and these trigger points
shrinks, greater efforts by consumers to conserve
fuel will surely follow.
If consumers become more anxious about fuel
prices, the door opens even wider for alternative
vehicles and fuels or public transport. Ridership
on public transportation has already reached levels
in 2013 not seen since 1956. As far as alternative
fuels, however, diesel seems to present the greatest
growth potential in the near term, and is itself not
immune to price volatility.
According to EIA, distillate demand spikes in
the winter months largely because of the demand
for heating oil. It then steadily declines through
the summer. However, demand for on-road diesel
fuel (also known as ultra low sulfur diesel [ULSD]
containing less than 15 ppm sulfur) runs opposite
of this broader market. EIA data for the years
2007 to 2013 demonstrates an average increase
in demand of 12.6% from January through June.
Meanwhile, the average retail price has increased
an average of 5.1% during this time.
With consumer demand for transportation fuel
increasing every spring and summer, and the price
of gasoline and diesel fuel historically following
similar trajectories, consumers might start seeking
alternative options. But unless such options are
readily available at a price that is clearly advan-
tageous, consumers will likely continue to rely
on gasoline and diesel. In the absence of viable
alternatives, their future choice of vehicles may be
influenced most significantly by fuel economics and
the relative economy of their vehicles.
What the future will hold for fuels and vehicles is
a topic of great debate and evaluation, which is warranted considering the importance both markets
have on the U. S. economy. But this is truly a very
simple issue — like so many other things, it comes
down to money. Consumer interests in transportation options remain centered around the impact
their choice will have on their personal budgets.
Despite advocates who claim consumers are
seeking “green” alternatives and are inspired by
altruistic motivations, the fact remains simple:
Whether at the pump or choosing a mode of travel,
the only green that truly matters to consumers is
the green in their wallet. To understand which fuels and vehicles are the likely choice of consumers
going forward, just watch the money.
For more information about the Fuels Institute or
how you can get involved, contact John Eichberger,
executive director, at email@example.com
ULTRA LOW SULFUR DIESEL DEMAND & PRICES
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GASOLINE PRICE GASOLINE DEMAND