U.S. gas demand on the decline

NEW YORK -- The world's biggest gas-guzzling nation has limits after all.

After seven decades of mostly uninterrupted growth, U.S. gasoline demand is at the start of a long-term decline. By 2030, Americans will burn at least 20 percent less gasoline than today, experts say, even as millions of more cars clog the roads.

The country's thirst for gasoline is shrinking as cars and trucks become more fuel-efficient, the government mandates the use of more ethanol and people drive less.

"A combination of demographic change and policy change means the heady days of gasoline growing in the U.S. are over," said Daniel Yergin, chairman of IHS Cambridge Energy Research Associates and author of a Pulitzer Prize-winning history of the oil industry.

Government and industry officials -- including the CEO of Exxon Mobil -- say U.S. gasoline demand has peaked for good. It has declined four years in a row and will not reach the peak level reached in 2006 again, even when the economy fully recovers.

In fact, the ground was shifting before the recession. The 2001 terrorist attacks, the war in Iraq, Hurricane Katrina and pump prices rising to a nationwide average of $3 a gallon for the first time in a generation reignited public debates about the political and economic effects of oil imports and climate change. Also, the popularity of SUVs began to wane, and the government started requiring refiners to blend corn-based ethanol into every gallon of gasoline.

Americans are burning an average of 8.2 million barrels -- 344 million gallons -- of gasoline per day in 2010, a figure that excludes the ethanol blended into gasoline. That's 8 percent less than at the 2006 peak, according to government data.

The decline is expected to accelerate for several reasons.

* Starting with the 2012 model year, cars will have to hit a higher fuel economy target for the first time since 1990. Each carmaker's fleet must average 30.1 mpg, up from 27.5. By the 2016 model year, that number must rise to 35.5 mpg. And, starting next year, SUVs and minivans, once classified as trucks, will count toward passenger vehicle targets.

* The auto industry is introducing cars that run partially or entirely on electricity, and the federal government is providing billions of dollars in subsidies to increase production and spur sales.

* By 2022, the country's fuel mix must include 36 billion gallons of ethanol and other biofuels, up from 14 billion gallons in 2011. Put another way, biofuels will account for roughly one of every four gallons sold at the pump.

* Gasoline prices are forecast to stay high as developing economies in Asia and the Middle East use more oil.