John Kemp is a Reuters market analyst. The views expressed are his own.
LONDON – Fuel demand in Texas is growing strongly as lower oil prices encourage motorists to use their vehicles more and buy larger replacements.
Receipts of motor fuel taxes in February 2015 were 6 percent higher than in the same month in 2014, according to the Texas Comptroller of Public Accounts.
Texas collected almost $284 million in motor fuel taxes last month compared with $269 million in February 2014 according to the comptroller’s monthly Revenue Watch report.
Motor fuel taxes must be paid to the comptroller by the 25th day of the month after which they are collected by suppliers and distributors, so the February receipts are for gasoline and diesel sold in January.
Year-over-year collections – and by extension gasoline and diesel sales – are growing at the fastest rate for more than a decade.
Texas consumed 35.7 million gallons of gasoline and 20.1 million gallons of diesel each day in 2014, according to the U.S. Energy Information Administration.
Texas accounts for 10 percent of nationwide gasoline sales and 13 percent of diesel sales. The state is second only to California in the consumption of gasoline and is the largest diesel consumer in the union.
Texas tax statistics are the fastest leading indicator of fuel sales. But nationwide data in recent months has painted a similar picture of rapidly growing gasoline and diesel sales across the country as the economy strengthens and cheaper prices encourage more driving.
Contrary to the International Energy Agency, which last week painted a gloomy picture in its monthly Oil Market Report, there is evidence the oil market is rebalancing relatively quickly.
The number of rigs drilling for oil in the United States has fallen by almost half in the last five months, which should soon cause shale output to level off or fall in the next few months.
In the meantime, gasoline and diesel prices have dropped by $1 per gallon since June 2014, encouraging more driving.
Crude inventories are high but are a lagging indicator. More forward-looking data suggest rebalancing is proceeding rapidly.
(Editing by William Hardy)
This article was from Reuters and was legally licensed through the NewsCred publisher network.