2009 Europe and U.S. Consumption Reflect Recession
United States Consumption (Million Barrels Per Day)
-8.4%
5.03
5.49
Middle Distil-
lates
0.3%
9.02
8.99
Gasoline
Growth
Est. 2009
2008
OECD European Consumption
(Million Barrels Per Day)
-2.6%
7.47
7.67
Middle Distil-
lates
-2.5%
2.30
2.36
Gasoline
Growth
Est. 2009
2008
Source: EIA Short Term Energy Outlook October 6, 2009; IEA Oil Market Report, September 10, 2009.
SWhile the distillate market was going through the unsually tight situation in 2008 just described, the recession was underway.  The recession officially began in December of 2007, but petroleum demand in the U.S. and Europe did not plummet until the second half of 2008.  Across the year, U.S. gasoline demand dropped 3.2% annually in 2008 from 2007, and distillate demand fell 5.7%.

SThis chart compares 2008 and 2009 for the U.S. and Europe.  While both regions show declines, there are some distinct differences.  In the U.S., the gasoline decline seems to have slowed, and for the year, we expect demand to grow slightly in 2009 over 2008.  Distillate demand, on the other hand is still expected to drop significantly by 8.4%.  Distillate demand in the U.S. is used mainly in the heavy-duty trucking sector, which is hit hard with a slow economy since there are fewer goods to be moved.

SEurope, on the other hand, is seeing a larger decline in gasoline and less in distillate.  This is the result of the continued move to use more distillate in the light-duty fleet.  That is, Europe’s distillate market contains light-duty vehicle use, which is less subject to economic declines than the commercial heavy-duty use.  This is cushioning the distillate decline compared to distillate use in the U.S.

SThere still is much uncertainty as to when and how much of a rebound we will see in product demand.  But we may see European distillate growth return to positive numbers sooner than in the U.S. as a result of its light-duty vehicle use.  But the rebound may be slow in coming.  While EIA is forecasting improvement in the U.S. economic situation in 2010, with U.S. total petroleum demand increasing over 2009, total demand at 19.09 million barrels per day is smaller than demand in 2008.