by: Kevin Hughes
(Natural News) A drop in the demand for fuel amid slow economic growth has stoked fears of a recession among investors.
The demand for diesel – the fuel of the industrial economy – has dropped abruptly as freight markets settle down. Fuels for vehicles have also seen a drop in demand as motorists are tightening their belts and cutting on spending. According to analysts, these signs indicate a slowdown in the world’s leading economy that could soon go down to recession.
The demand for distillates including diesel, which is used to power the trucks and trains that deliver goods around the country, was about six percent lower in the first three months of 2023 compared to the same period last year as shown by government data gathered by S&P Global Commodity Insights.
The benchmark diesel futures for fuel brought into New York Harbor recently plunged to a 15-month low as fears of a diesel shortage from last autumn have turned into fears of weak diesel demand. (Related: America is running out of gas: Surging demand leaves U.S. with LESS THAN A MONTH’s supply of diesel.)
Retail diesel prices have also been trending down for most of this year. The national average price of diesel has dropped by 5.3 cents and stands at $4.07 per gallon, $1.18 lower compared to the same period last year.
Petrol demand, which is more closely connected to consumer travel, has been delayed so far, with consumption in the first quarter off by two percent compared to last year. However, there are hints that it is starting to slide.
Pump sales also on a downhill slide
The Dow Jones’ Oil Price Information Service (OPIS), which tracks activity across 40,000 stations nationwide, also observed a decline in pump sales. Gasoline volumes sold in the week to April 22 were down about three percent against the same week last year; six percent against the same week two years ago; and 20 percent against same week in 2019 – before the Wuhan coronavirus (COVID-19) pandemic struck.
Meanwhile, the American Automobile Association also noted the lower pump sales despite gasoline’s low average price of $3.62 a gallon. This was way lower than the $4.16 a gallon last year. The Russia-Ukraine war sent pump prices soaring to record levels of more than $5 last summer.
“If you were looking at it in the closet, and not knowing what the wider economy was doing, you would say we’re seeing some sort of an industrial recession,” stated Tom Kloza, OPIS global head of energy analysis.
“We’re just not seeing the consumer really driving. I think the consumer isn’t necessarily motivated to drive more just because prices are cheaper than they were last year.”
Rory Johnston, who heads market research service Commodity Context, commented on the development. “What we’re seeing is this ongoing narrative of persistently resilient consumers, and this flagging industrial and business investment sector – which is where you see diesel demand falling off, you see gasoline demand remaining firm. [But] if the business sector continues to retrench, that will, inevitably, eventually feed into the consumer side,” he said.
Follow FuelSupply.news for more news about America’s oil supply.
Watch this Fox Business interview that discusses why America is on the brink of an oil crisis.
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