MARQUETTE - The Michigan Public Service Commission is predicting gasoline sales in Michigan will be lower this year with consumers reacting to consistently high gas prices and the use of higher fuel efficiency vehicles.
The assessment - which predicts a drop of .7 percent in gasoline sales across the state this year - was part of the commission's "2013-2014 Winter Energy Appraisal" released Wednesday.
"I think customer behavior has changed over time to respond to the higher gasoline prices and then also fuel efficiency is improved as people replace an older vehicle with a newer vehicle, there's an inherent upward trend in fuel efficiency as well," said John Quackenbush, chairman of the commission.
A gas station price sign is shown in downtown Marquette Friday evening. The Michigan Public Service Commission said gas sales this year are predicted to be down in response to consumer reaction to consistently high prices and use of more fuel-efficient vehicles. The commission said the statewide average price has not been below $3.20 per gallon since January. (Journal photo by Jenna Thompson)
Gas sales in Michigan have decreased every year since 2004, with the exception of 2010, the commission appraisal said. That decrease has resulted in a 14.5 percent net reduction in demand.
The U.S. Energy Information Administration expects West Texas Intermediate crude oil prices to average $101 per barrel during the last quarter of this year and $96 a barrel next year.
"Crude prices at this level are expected to contribute to a decline in U.S. liquid fuel consumption in 2014," the appraisal said. "Domestic crude oil production is expected to continue its upward trajectory due in part to increased oil-drilling, specifically exploration in developing shale formations."
This year, domestic oil production reached the highest level in 20 years, the commission said. North Dakota and Texas were the two top-producing states.
The commission said in addition to crude oil prices, planned and unplanned refinery outages have "put upward pressure on regular unleaded gas prices. The statewide average price has not been below $3.20 per gallon since January.
With demand dropping, prices have dropped some, but not enough for many consumers.
"Crude oil is priced more on a global level and then the price we pay locally is driven a lot off of the global price and then there's the transportation costs and the refinery costs that creates local differences perhaps," Quackenbush said. "But deep down, we're still very much tied to the global price for oil. Parts of the world that are having very large demand increases still for oil, using more than they have been, I think has contributed to keeping the global price for crude oil on the high side."
The statewide average price for a gallon of regular unleaded gasoline was $3.43 Friday.
An annual spring appraisal produced by the commission focuses on electricity and gasoline costs associated with the summer travel and cooling season.
The public service commission is an agency within the Michigan Department of Licensing and Regulatory Affairs.
John Pepin can be reached at 906-228-2500, ext. 206. His email address is firstname.lastname@example.org