Released on June 19, 2002
(Next Release on June 26, 2002)

Will Gasoline Demand Sizzle or Fizzle This Summer?
In the run-up to the July 4th holiday, many analysts are wondering if motor gasoline demand will sizzle like a backyard cookout or fizzle like a dud firecracker. Typically, the start of the summer drive season (Memorial Day holiday) ushers in rising gasoline demand and higher prices. Instead, what holiday travelers witnessed were falling gasoline prices, spurred in part by apparent lackluster demand and ample supplies. And some analysts feel that the sluggish start may be a prelude to continued weak motor gasoline demand for the remainder of the summer drive season. However, some of the supply-demand fundamentals behind the recent slide in motor gasoline prices are not expected to continue throughout this period. While falling gasoline prices leading up to the Memorial Day holiday could be attributed mostly to the combined effects of strong refinery production and record imports that provided for abundant gasoline inventories, the level of gasoline demand was far from lackluster as might be implied by weekly data during this same period.(See text from the June 5, 2002 issue of “This Week In Petroleum.”) Gasoline demand for the most recent four-week period ending June 14, 2002, totaled 8.8 million barrels per day, 1.2 percent above the same period last year. Moreover, EIA models estimate gasoline demand may average more than 9 million barrels per day during the months of June and July, given expected growth in key economic indicators such as real disposable income and Gross Domestic Product (GDP), during this period. And with summer recess beginning, gasoline demand will inevitably show even more strength over the next several weeks as family vacations begin in earnest. Furthermore, historical data supports the view that peak gasoline demand occurs at a greater frequency during the latter months of summer than at any other time during the year. Thus, it can reasonably be expected that gasoline demand will continue to grow, with peak demand most likely occurring sometime during the July/August travel period, providing an extra sizzle to the summer season.