The document analyzes the relationship between gas prices and U.S. oil consumption between 2001-2009. It finds that as gas prices rose from 2002-2004, oil consumption also grew, disproving the initial hypothesis that higher gas prices would decrease consumption. While gas prices continued rising until 2008, consumption leveled off. Lower gas prices from 2008-2009 did not result in higher consumption either. Therefore, the document concludes there is no clear inverse relationship between gas prices and U.S. oil consumption as was hypothesized.

1. Gas Prices and
the effect on
U.S. Oil
Consumption
By: Benjamin Falkowitz

2. Hypothesis
 As gas prices increase,
U.S. consumption of oil
will decrease due to a
lack of demand and
willingness to buy at


higher prices
 We are looking for an
inverse relationship for
the two variables. That
is, as one goes up, the
other will go down.

4. Meaning of the Data
 The chart on the previous slide depicts how
gas prices rose at an average of 31.3 cents
per gallon in the six years between 2002 and
2007. Then, during the height of the Great
Recession, the yearly average gas price fell
roughly 92 cents per gallon.
 Over the period between 2002 and 2009, the
average yearly price of gas was $2.32/gal

6. Meaning of the Data
 The previous slide shows that U.S. oil
consumption rose slightly between 2001
and 2004, and then was fairly steady until
2007
 Since 2007 U.S. consumption dropped
sharply
 The average yearly consumption over the
8 year span was 20.12 million barrels per
day

7. Comparison of the Two
Statistics

8. Comparing the Data using
Time Series

9. Comparing the Statistics Using
a Scatter Plot
Millions of
barrels of
oil per day
Price of Gas in $/gal

10. Conclusion & Findings
 There seems to be no real connection between gas price, and U.S.
oil consumption
 As gas prices rose between 2002 and 2004, oil consumption also
grew
 Gas prices then continued to grow steadily between ‘04 and ‘08
as U.S. oil consumption leveled out in that same time
 Then, when gas prices dropped significantly between 2008 and
2009, so did U.S. consumption
 The initial incline in gas prices did not deter U.S. oil consumption,
and the subsequent fall in gas prices did not result in higher
consumption
 Essentially, there is not an inverse relationship between gas prices
and oil consumption, as our initial hypothesis stated.

11. Sources
 http://data.bls.gov/cgi-
bin/surveymost?ap
 http://www.indexmundi.com/g/g.aspx?v
=91&c=us&l=en