Low prices may stir U.S. gasoline demand recovery

NEW YORK (Reuters) – Low gasoline prices are beginning to entice Americans to take to the roads again and may nurture a nascent rebound in gasoline demand after a year of high pump prices and the slumping economy throttled consumption.

U.S. gasoline demand rose by 0.1 percent in the four weeks ending February 6, according to government data. That marked the first four-week increase since last spring, when surging prices and a souring economy began to take a toll on road travel.

The modest increase in demand comes as average U.S. gasoline prices run at about $1.95 a gallon, down from the record above $4 a gallon hit last July, coaxing some drivers to spend more time behind the wheel, analysts said.

“It’s clearly the result of lower prices, more than any other factor, that is affecting the consumer,” said Ed Morse, chief economist for LCM Commodities in New York.

Year-on-year demand data is also getting a boost as it is now being compared with depressed levels recorded in 2008.

Another sign of recovery in gasoline demand came from the U.S. Commerce Department, which said sales of the fuel jumped 2.6 percent in January, the biggest gain in seven months, after sliding 15.6 in December.

Reuters