UBS economist Paul Donovan has analyzed the interplay between visible oil prices at fuel stations and evolving consumer behavior in major economies, focusing on the United States, United Kingdom, Germany, and France [1]. Donovan notes that in the US, gasoline prices rising above USD 4 per gallon are often portrayed as a national crisis, yet actual motor fuel demand has remained at pre-pandemic levels and is below those recorded in 2015 [1]. In the UK, motor fuel demand is roughly the same as in 2015, but has declined by 3.5% compared to pre-pandemic figures, with Britons driving about 0.8% less than in 2019. Similar trends are observed in Germany and France, where motor fuel consumption is flat or lower compared to previous years [1].
Donovan attributes these shifts partly to increased fuel efficiency and the adoption of electric vehicles, but also to broader behavioral changes among consumers who are actively reducing their motor fuel consumption [1]. He emphasizes that pricing plays a significant role in influencing these behaviors, suggesting that higher prices can encourage consumers to cut back on usage [1].
The report also discusses the political dimension, noting that governments often choose to subsidize fuel prices rather than allowing market prices to drive behavioral change. Donovan argues that this approach should be reconsidered, as subsidies may prevent consumers from responding to price signals, while governments could instead offset hardship through other means [1].
CONCLUSION
UBS's analysis indicates that motor fuel demand in the US and Europe is flat or declining, despite visible price increases at the pump. The findings suggest that consumer behavior is shifting, with pricing and policy choices playing a key role. Market participants should monitor how governments balance subsidies and price-driven behavioral changes, as this could impact future oil demand trends.