From S&P Global Platts, March 28:
Get a quick look at expectations on China's iron ore and steel markets for the next quarter, as well as the impact of the continuing Russia-Ukraine war in the rebar-scrap market. Our editors in the US are watching gasoline prices, and oil and gas business sentiment, while polyethylene trade is in focus in Asia.
....3. California could foreshadow gasoline demand decline in entire US
What's happening? In Q4 2021, the US West Coast saw a decline in gasoline demand which was more pronounced than the entire country. This coincided with regular unleaded gasoline prices in the area reaching $4/gal. In the latest reporting week, the EIA indicated regular gasoline retail prices in California of $5.70/gal while the US averaged $4.24/gal. Over the last month, as price increases accelerated, California mobility was more tempered relative to the overall US. Weekday mobility is more inflexible than weekend mobility because a larger component is comprised of driving to work.
What's next? With California gasoline prices being so much higher than the rest of the country, it may be a leading indicator of what could ultimately be seen in the rest of the US with regards to demand impairment. As prices rise to ever more elevated levels, price elasticity is not seen as behaving linearly and demand losses grow disproportionately. Demand losses are estimated be about 35,000 b/d in a low elasticity sensitivity case, to around 300,000 b/d in a high elasticity sensitivity case. This demand loss would be mostly felt in discretionary driving and be reflected in weekend mobility data. If weekend mobility data declines, losses in gasoline demand would begin to mirror that which had already been observed in the West Coast and specifically California....
