Regions

California motorists hit the road again: Kemp

March 28
9:57 AM 2015

California's gasoline sales are rising at some of the fastest rates for a decade, as an improving economy and lower fuel prices encourage more driving, according to state tax records.

Gasoline sales in December were 2.6 percent higher than the same month a year earlier, according to records published on Thursday by the California Board of Equalization, the agency responsible for collecting fuel taxes.

Gasoline sales have been gradually rising since June 2013, but there has been a marked acceleration in sales since August 2014, coinciding with the sharp drop in fuel prices (link.reuters.com/jyn44w).

California motorists consumed almost 960,000 barrels of gasoline per day in 2014, equivalent to about 1 percent of global oil demand.

Increased sales in December were equivalent to an extra 24,000 barrels per day (bpd) compared with the same period a year earlier.

That may not sound much, but if increased sales being reported in California are reflected nationwide, it would amount an increase of almost 220,000 bpd.

There is no reason to believe California's motorists are behaving differently to those in other states.

Fuel tax records from Texas, the second largest market after the Golden State, show a similar trend.

Roadside monitoring stations across the entire national highway network also show a marked acceleration in traffic volumes since the middle of 2014.

For the time being, stronger demand is confined to gasoline. Diesel sales at the end of last year were little changed compared with the same period in 2013.

The gasoline/diesel split suggests extra demand is coming from private motorists since gasoline is mostly used in private cars and small trucks while diesel dominates the medium and heavy truck sector.

According to Caltrans, the state department of transportation, the volume of traffic on California's state highways grew by 2.6 percent last year, the fastest rate since 2002.

Traffic volumes picked up even more in January and especially February, when Caltrans estimates traffic was 4.9 percent higher than in the corresponding month in 2014.

All the real-time indicators point to a big increase in driving across the United States as the economic situation improves and lower fuel prices encourage motorists to get behind the wheel more often.

If driving continues to grow at recent rates, the United States could see the strongest gasoline demand this summer since 2008.

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