There is NO RELATIONSHIP between the price of gasoline and the U.S. consumers’ demand for it.

Data

You can find monthly U.S. gasoline prices here. This goes back to 1973 for unleaded, but only to 1978 for composite.

You can find monthly U.S. gasoline product supplied here. This goes back to 1945.

You can find monthly U.S. CPI for all urban consumers here, it goes back to 1947.

You can find monthly U.S. population estimates here, going back to 1959.

Analysis

Various charts with commentary. Charts are clickable for a larger view.

In the limits of the price data, there appears to be no relationship between raw price and aggregate demand.

The demand curve appears to slope upward, indicating that higher price = higher demand. This is an artifact of the confounding variable, TIME, whereby both demand and price both rise over time, and dumb math imputes a relationship between demand and price.

Here the price is adjusted by the CPI. I would prefer to use a more appropriate number, such as one of the Ms, to deflate price, but since I’m dealing with economists (and those influenced by them) here, CPI it is! Note that the demand curve is relatively flat and has next to zero correlation with price adjusted by CPI.

When we adjust the demand by population, all correlation to CPI-adjusted price goes away. There is NO RELATIONSHIP between the price of gasoline and the U.S. consumer’s demand for it.

Finally, we have the demand for gasoline on a raw and per capita basis. I’ve added a regression line showing the per capita demand increases over time in basically a linear manner (exponential and power series show similar R-Squares).

There is NO RELATIONSHIP between the price of gasoline and the U.S. consumer’s demand for it. The “Demand Curve” is FLAT. There is only an uptrend in per capita demand, which varies seasonally about that uptrend, and an underlying population growth trend. Don’t be fooled by oscillations about the total demand trend, but keep your eye on the longer-term view.

This uptrend in per capita and total energy usage is a feature of civilization’s advancement in terms of sophistication and standard of living; it will continue unabated, barring some humanity-threatening or civilization-threatening catastrophe, basically forever. In terms of gasoline usage specifically, it will continue until some technological advance ends the petroleum age. No technological age has ended for the “lack of” its defining characteristic; we still have plenty of stone, bronze, and iron in the world, and there are more wooded acres today than there were 100 years ago; the silicone age of computing supplanted transistors despite all the components to create transistors being in supply, and the silicone age is about to end - without humans running out of silicone.

So will it be with the petroleum age.

There was some previous discussion along these lines in Peak Gasoline.