Gas Prices Are Down, But Demand? Turns Out That's Down Too

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Conventional wisdom says that when gas prices rise, demand falls--and vice versa.

Except that's not what's happening right now, as TheCarConnection noted a few days ago, pointing to data published in the Detroit Free Press.

The newspaper noted that retail demand for gasoline is down almost 5 percent over the past week, falling to levels that we haven't experienced since last October.

As with all things having to do with global oil prices and the per-gallon gas price that shows up at your local station, it's often not clear which is cause and which is effect.

But with the economy still slow and consumers remaining cautious, reduced gasoline demand is a trend that's likely to continue indefinitely.

The U.S. vehicle population isn't likely to increase much over the next few years--it's actually been falling since the start of the 2008 recession--and new cars now deliver significantly higher gas mileage than they did just a few short years ago.

That means that the same number of vehicles will use less gasoline.

And if "gasoline" migrates slowly from today's E10 to the E15 that was just approved by the EPA, there will be a bit less petroleum and a bit more agriculture in your tank.

It all goes to show, once again, that public perception lags a few years behind reality.

Here's a little test. Ask your friends, family, and coworkers whether each of the following statements are true:

They're both true, but we'd wager most folks don't know that's the case for one or both of them.

Meanwhile, enjoy the cheap gasoline while it lasts--even if you're not doing much driving either.

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