Answer: Gasoline consumption dropped 3.3% from last year to 9.347 million barrels a day, according to weekly data released by the federal Energy Information Administration. For the first week of July, that is the least drivers have used since 2003, when consumption was 9.05 million barrels a day.

So gasoline demand is still 342,000/day higher than it was a mere 5 years ago, and all we hear about is "demand destruction"? The phrase "a drop in the bucket" comes to mind....

U.S. May Trade Gap Shrinks; Import Prices Surged in June

The U.S. bill for crude oil imports in May increased, elevated by a record oil price. It totaled $31.25 billion, up from $29.34 billion in April. The average price per barrel surged by a record $9.47 to an all-time high of $106.28 from $96.81. Crude import volume, however, decreased to 294.00 million barrels from 303.05 million, a sign soaring prices might be undercutting demand for oil within the sluggish U.S. economy.

Gas Prices Spur Drivers to Cut Use to Five-Year Low:

However, declining gasoline consumption in the U.S. has done little to deflate gasoline prices at the pump so far. The problem is that demand for other fuels, namely diesel, continues to be strong. This is helping to keep oil prices high.

In the U.S., demand for diesel and similar fuels is up almost 6% from last year. Elsewhere in the world, especially in developing countries such as China, the growth of diesel demand is stronger.

"Diesel is going to remain the fuel of choice in transportation," says Francisco Blanch, head of global commodity research at Merrill Lynch & Co. "We still see strong demand for air travel, for trucking and for trains."

Diesel prices have climbed more than gasoline, gaining 65% to a national average of $4.81 a gallon in the past year, compared with a 38% rise in gasoline.

Bonus question: U.S. demand dropped about 300,000 barrels a day. What percentage is this of global demand (85 million barrels/day)?

Answer: .0035. Does anyone really think shaving 300,000 barrels a day from 85 million barrels/day is going to deeply, truly and enduringly affect price? If demand in the U.S. drops 5 million BPD from 21 million BPD to 16 million BPD, even that unprecedented, stupendous decline represents a mere 5.9% of global demand.

Run the numbers, and then take all the stories about "demand destruction" with a large grain of salt.

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