Oil Industry Braces for Drop in U.S. Thirst for Gasoline Jacob Bryant Ryan Bush Ross Cable Lauren Betz

Companies such as Exxon Mobil Corp believe that Americans needs for gas is decreasing Reasons include the form of transportation Americans choose and a growing emphasis on alternative fuels

Americans are starting to commute less, utilizing fuel by using fuel efficient cars and taking public forms of transportation ex. Trains, Buses, Subways, Airplanes This has caused many gas stations to shut down- the number of gas stations has decreased 11% in the past decade In 2007 drivers used million gallons of gas per day, this number is expected to drop to million this year (down 7%)

Many industry observers think the drop in the need for gas will not reverse even when the economy grows Exxon believes that fuel demand will decrease 22% by 2030

Impact on Local Funds: Declines in gasoline tax revenue is forcing local and Federal governments to search for new sources of funding. Oil Companies investments in biofuels and battery technology is resulting in a drain on gasoline demand. Corn, perennial grasses and municipal waste are soon to be the future resources for biofuels. President Obama’s pledge to end the “Tyranny of oil” and energy efficiency could accelerate the future trends for biofuels.

Lower gas prices are back after a multiyear spike in prices. This could reignite consumers wants of fuel guzzling SUV’s, especially when the economy strengthens. The 2007 Energy Independence & Security Act proposes by 2020, that all vehicles sold in the U.S. must average 35 MPG, versus 27.5 MPG for cars now and 23.5 MPG for light trucks Makers of U.S. transportation fuel must blend 36 billion gallons of biofuels a year by 2022, as opposed to about 11 billion this year.

Government policy is pushing gas consumption “down,down,down”, says Ed Feo who advises clients on renewable energy policies. “There isn’t a single policy I can think of that supports the use of higher gasoline use.”-Ed Feo Americans are changing by demographic shifts that once spurred to higher gasoline consumption to have run their course.

More people are minimizing commutes by living closer to their jobs. Inner cities & surrounding suburbs are growing denser by shortening trips to work & the mall. A growing number of workers are commuting by bus, train or working from there own homes. Even as population rises, the rate of gasoline consumption appears to be slowing down.

From , U.S. population rose 13%, while vehicle miles rose 54% as gas demand rose 45%. Between 1990&2000, the population rose at a rate of 13%,miles driven rose by only 28% with gas demand increasing 17%. A different scenario plays out in China as it’s expected that their gas demand will triple by 2030.

Road Repair Government has less money available for one of its most basic responsibilities; keeping roads in working order. Federal gasoline tax revenue fell 3% last year.- according to the Department of Transportation Congress had to plug an $8 billion hole last year in the Highway Trust Fund. Some Towns/Cities are saving by building new roads without streetlights, curbs or traffic lights.

A commission set up by Congress proposed a remedy: Base taxes on the number of miles people drive, rather than how many gallons they pump The reason for this is to continue raising money as biofuels & other fuels displace oil-based gasoline. More then a dozen states are considering to increase their own gasoline taxes Refiners must adjust for less driving but also for a higher bio-fuels component in what they sell Last year, plant based fuel made up about 7% of the gas Americans pumped. In the next decade it should double

The lost business from gasoline demand has shut down at least one Oil refiner company. – Flying J inc. filed bankruptcy in December Sunoco has said if they can’t sell a refinery in Tulsa, Oklahoma by the end of the year it will shut down. Numerous companies are building “bio-refineries” to turn plants into ethanol or diesel Due to retail consolidation there are 11% fewer gas stations then there were a decade ago.