This document analyzes the relationship between gas prices and U.S. oil consumption between 2001-2009. It presents data showing gas prices rising from 2002-2007, then falling sharply in 2008-2009. U.S. oil consumption rose slightly until 2004, then leveled off until 2007 when it dropped sharply. A scatter plot of the data showed no clear inverse relationship between the two variables, as higher gas prices did not consistently lead to lower consumption or vice versa. The conclusion is that the data does not support the hypothesis that higher gas prices reduce U.S. oil consumption.

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