No Signs of Demand Destruction Yet. The Energy Report 05/14/2026

There is nothing to see here, that is at least when you talk about oil and gasoline demand destruction.  While the International Monetary Fund has warned that sustained oil prices of over $120 a barrel could trigger a global recession, and the International Energy Agency has raised concerns about oil demand destruction, there is little evidence of that happening in the United States right now.

 In fact, our friends at that the Energy Information Administration said yesterday that U.S. petroleum demand, measured by product supplied in the latest Weekly Petroleum Status Report, remains firm and is only beginning its seasonal summer climb.  

Now I know that some analysts focused on last week’s decline in gasoline demand, as a sign that consumers were parking their cars due the surge in gasoline prices. The reality is that consumption is still roughly in line with where it was a year ago. 

The EIA said that finished motor gasoline demand averaged 8,754 thousand barrels per day (kb/d)in the latest week, down 59 kb/d from the prior week but only slightly below year-ago levels.

In other words, there is still no meaningful sign that higher pump prices are sharply reducing demand. The four-week average is down a modest 0.8% from last year, and this is still before the peak summer driving season.

And more than likely cooler weather this spring, especially in the Midwest, has probably delayed the start of early road-trip demand. The peak summer driving season typically begins around Memorial Day and usually runs strongest from June through August, so it is way too early to say that gas demand destruction is happening.

Sure, we must be sensitive to the impact of rising costs on the consumer, especially in light of the hot CPI and PPI but it’s coming against a backdrop of a strong labor market and solid stock market and solid economic growth.  So, let’s dig into the EIA data and see what it says about overall demand.  The Energy Information Administration (EIA) reported total oil product demand, measured by product supplied, at 19,891 thousand barrels per day (kb/d). That was up 406 kb/d, or 2.1%, from the previous week’s 19,484 kb/d and 450 kb/d, or 2.3%, above the same week last year.

On a four-week average basis, demand is running at about 20.1 million barrels per day, up 1.1% from the same period last year. In other words, overall U.S. demand is still holding a bit above last year’s pace when viewed through a smoother, more reliable lens.

The increase reflects broader economic activity, stronger distillate consumption, and gains in other product categories and record US Exports. Now keep in mind that EIA data can swing week to week due to sampling, timing differences, imports, and exports, the four-week average offers a better measure of the underlying trend. Yet claims of major gasoline and oil demand destruction appear overstated.

Kerosene-type jet fuel demand came in at 1,545 kb/d, down 165 kb/d from the previous week and 5.5% lower on a four-week average basis. This reflects normal seasonal airline scheduling patterns, along with some canceled flights due to tightness in jet fuel supply. While some may argue that these points demand destruction in air travel, these levels are not unusual for this time of year.

On the supply side the Strategic Petroleum Reserve released a record breaking 8,6 million barrels of oil from our reserves to feed an oil demand hungry world  with record-setting exports.

Total US petroleum exports surged to 13,137 thousand barrels per day, powering global demand and outpacing recent averages of 12,974, 10,952, 10,287, and 13,293, while comfortably beating the prior low of 10,558.Crude Oil exports delivered a strong 5,492 — well above the recent range of 3,369–5,370. Total Products remained robust at 7,645, showcasing America’s reliable supply of refined fuels.

 Motor Gasoline at 1,048 — a solid performer.

Kerosene-Type Jet Fuel climbing to 455. Distillate Fuel Oil holding strong at 1,551.Propane exports booming at 2,168 — keeping homes and industries fueled worldwide. Other Oils contribute a powerful 2,107.

America continues to lead as the world’s top energy supplier, and China might be back as a customer. President Trump and Chineses Xi met amid grand pageantry at the Great Hall of the People and reports  say that Xi signaled strong interest in buying more American oil to diversify away from the Middle East. Fox News says that  both leaders agreed Iran must never get a nuclear weapon and called for the Strait of Hormuz to reopen for free oil flow.  Apparently trade talks advanced on agriculture, aerospace, and big-ticket U.S. exports like soybeans, beef, and aircraft, yet commodity markets are still looking for something more solid.

Still gasoline prices have continued moving higher in the last few days recently, with diesel staying near record territory in some regions. According to AAA, the current national average for regular gasoline stands at $4.511 per gallon, up from yesterday’s $4.504, compared to $4.536 a week ago, $4.125 a month ago, and $3.157 a year ago. Mid-grade is currently averaging $5.005 (yesterday $4.994, week ago $5.015), premium $5.375 (yesterday $5.366, week ago $5.388), diesel $5.659 (yesterday $5.644, week ago $5.674), and E85 $3.633 (yesterday $3.614, week ago $3.669).

California is feeling the pinch much more, with the state regular average at about $6.147 per gallon currently (yesterday around $6.148), mid-grade $6.388, premium $6.572, and diesel around $7.444. These levels far exceed the national figures due goofy green energy mad policies.

And while the Iran war is a big factor, refinery disruptions have also played a big role in the recent spike, especially for diesel. Planned and unplanned outages in the Midwest and elsewhere reduced supply during a period of strong demand, pushing diesel prices toward all-time highs in states like those in the Midwest. Several key facilities (such as those from Marathon, Phillips 66, and BP) have been in maintenance or had issues, with some expected to restart in May, which should bring some relief. 

The summer driving season is only beginning, and the current data reflects early May conditions. Gasoline demand should build from late May through July as vacations and road travel increase. Seasonal trends and EIA outlooks suggest stronger consumption ahead, assuming travel activity and the broader economy remain supportive.

In short, total U.S. petroleum demand is holding steady to slightly above last year’s level as the country approaches peak summer consumption. Weekly data still contains noise, but the smoothed trend points to resilient underlying demand. Product supplied remains the best available proxy for end-user consumption. The next several EIA reports should confirm whether the usual seasonal increase in gasoline demand is taking hold.  Still high gas prices carry political risk not just for President Trump but leaders around the world . Bloomberg reported that” Brazil’s government announced new fuel subsidies to cushion the inflationary impact of the Iran war and, politically, to support President Lula. The government plans to spend up to 2.9 billion reais per month to subsidize gasoline and diesel. The program is set to run for two months, with officials already signaling it could be extended. The move also clears the way for Petrobras to raise prices after holding back adjustments to shield Brazilian consumers from volatile global oil prices.”

I guess when you look at the full situation, there has been a lot of fearmongering—some of it justified—about possible closures of the Strait of Hormuz and disruptions to oil production. On the other hand, the markets are telling us not to be quite so alarmed or to believe all the hype. The truth is probably somewhere in between. We continue to believe that the oil price high we saw on the first weekend of the invasion will likely prove to be high for this move. In the meantime, we could still see extreme volatility as headlines continue to shift. At the same time, the fact that Iran is unable to export any oil by sea is going to hurt its economy severely, and it is only a matter of time before that pressure builds. On the other hand, some analysts say that Iran can continue its terror activities for months, but we are already finding workarounds for oil that are offsetting some of that impact. Of course, the easiest solution would be to end the conflict and reopen the Strait of Hormuz. But I think the long-term outlook after this war is that the United States, along with the rest of our hemisphere, will continue to be dominant in energy exports to the rest of the world. Call me to open your account and get involved. 888-264-5665.

Natural gas is trying so hard to be bullish but faces big headwinds.  The EIA repot is the focus today and we are expecting solid injection of 83 Bcf while overall expectations are in the +70-85 Bcf range (consensus around +76 Bcf or so, with some estimates +67-86 Bcf). Last weeks was +63 Bcf vs. expectations of +72 Bcf), leaving storage at 2,205 Bcf as of May 1 — well above the 5-year average.

This keeps the injection season building robustly into summer, which is generally bearish unless offset by weather conerns or any surprises like a bullish miss with a smaller build due to lighter winds/power demand. The Fow Weather app  show that models and outlooks have been signaling a potential pattern shift toward warmer-than-normal temps, especially in the eastern/southeastern US into late May.  Shorter-term, some cooler systems linger in the Midwest/Great Lakes/Northeast, but the broader “strat” (pattern/stratospheric influences or just seasonal shift) turning warmer fits what you’re seeing on Fox Weather. This is helping support recent price pops despite ample storage — summer cooling + LNG exports remain key upside drivers.  This pattern change could pressure prompt-month prices lower unless offset by strong storage injections data or production cuts. Watch Midwest and Plains demand swings closely this weekend—any significant cooling reloads or extended severe weather disruptions to infrastructure could provide volatility upside. 

Fox Weather also  says that,  “As the stagnant Omega block “ pattern wanes, the chance for new severe storm development is taking shape across the Great Plains and Midwestern U.S. through the weekend. After days of heat across the Central U.S., the high-pressure system caught in the middle will now start to flatten, allowing a series of storm systems to pour into the Plains. This shift should bring increased thunderstorm activity, potential severe weather risks including large hail, damaging winds, and tornadoes, along with much-needed rainfall in some drought-stressed areas.” Good news for farmers!