Under high oil prices, American consumers can't take it anymore!

```

High oil prices are opening up a rift in US fuel consumption. Barclays' latest research report, based on its proprietary credit card transaction data, finds early signs of shrinking US consumer fuel demand—both fuel-up frequency and amount per refueling are decreasing, and the suppressive effect of high oil prices on end consumption is gradually emerging.

According to information from Trading Desk, Barclays' analysis based on Barclaycard credit card data on the 7th shows that in the past 30 days (rolling basis), the total gallons of fuel purchased by US consumers dropped 8% year-on-year. Even though total fuel spending increased 13% year-on-year, driven by an average oil price increase of 23%, the decline in consumption volume can no longer be masked by price factors. Based on AAA's national average daily price for regular unleaded gasoline, the current year-on-year price increase has reached 27%, higher than the 23% over the past 30 days, indicating that future consumption volume faces further downward pressure.

Barclays analysts pointed out that this trend was already evident in the first week of the Iran war and the starting rise of oil prices. By the fourth week of the war, the total fuel consumption officially turned negative year-on-year. The demand shrinkage signal revealed by this high-frequency credit card data provides significant reference value for judging commodity trends and consumer-side resilience.

It is noteworthy that the US Energy Information Administration (EIA)'s official weekly data as of March 27, on a four-week rolling basis, still shows a 1% year-on-year growth in gasoline demand, the same as at the beginning of the war in late February, and has not yet reflected a significant slowdown in demand. The divergence between the two sets of data highlights the leading edge of high-frequency credit card data in capturing demand inflection points.

Dual Contraction: Decreasing Refueling Frequency and Amount per Refueling

The decline in fuel consumption is jointly driven by two channels: reduced frequency of refueling and decreased amount of fuel per refueling.

In terms of frequency, the number of fuel-ups per user in the past 30 days dropped by about 1% year-on-year, a small decline but showing a clear downward trend since the first week of the war. Historically, US consumers fill up about 3.5 times per month, or roughly once per week to week and a half.

The change in fuel amount per refill is even more striking. The amount implied per transaction fell from a historically stable 11 gallons to about 10 gallons, a 7% year-on-year decrease. Barclays points out that this is an extremely unusual change in historical data and is the most direct behavioral response by consumers to high oil prices—with travel needs remaining relatively inelastic, they choose to buy less fuel per stop to control single spending.

There was a brief abnormal increase in refueling frequency at the start of the war. Analysts believe this may be because some consumers expected further oil price hikes and chose to "fill up early" to avoid rising costs. But as the war continued, this effect faded, refueling frequency steadily declined, and turned negative year-on-year. Taking both indicators together, Barclays believes this constitutes early evidence that US consumers are cutting fuel consumption.

Price Elasticity Estimates: Theoretical Model Suggests Further Downside for Demand

Barclays' commodities research team conducted a quantitative analysis of the price elasticity of US gasoline demand, decomposing it into "driving mileage effect" and "fuel economy effect."

Multi-factor model analysis shows that for every 10% increase in oil price, mileage falls by about 0.25% (elasticity coefficient -0.025); controlling for mileage, every 10% oil price increase further reduces gasoline consumption by about 0.45% (elasticity coefficient -0.045). Combined, the overall price elasticity of US gasoline demand is around -0.7% (i.e., for every 10% rise in oil price, demand drops by 0.7%).

Based on this calculation, since the outbreak of the Iran war, oil prices have accumulated a 40% increase, which theoretically corresponds to a combined 3% drop in gasoline demand from consumers and industry. However, EIA data as of March 27 show that on a four-week rolling basis, demand is still up 1% year-on-year, not yet validating the downward prediction above.

Analysts further point out that if high oil prices trigger a broader economic slowdown, the real impact of price elasticity may be amplified, and the drop in demand could exceed the model's predictions.

Data Methodology: High-frequency Analytical Framework Supported by Tens of Millions of Transactions

The analysis uses proprietary Barclaycard credit card data covering millions of active users and billions of transaction records, with over ten years of historical data. The analysis mainly targets transactions with merchant category codes (MCC) of "automated fuel dispenser" and "gas station," covering both self-serve and cashier pump scenarios.

Since credit card transaction data record only transaction amount, not actual gallons, Barclays infers consumption volume from total spending and AAA average retail oil price. To filter out seasonality—especially fluctuations in the transition from winter to summer driving season—the analysis uses year-on-year comparisons.

For reasonableness verification, Barclays calculates the historical average of about 11 gallons per fuel-up and about 3.5 times per month—combined with an average fuel efficiency of about 25 miles/gallon—translates to roughly 975 miles per month or about 12,000 miles per year, which closely matches the 13,500 annual miles reported by the US Federal Highway Administration in 2022, confirming the representativeness and reliability of this dataset.

~~~~~~~~~~~~~~~~~~~~~~~~

The above brilliant content is from Trading Desk.

For more detailed interpretation, including real-time analysis, frontline research, etc., please join [Trading Desk Annual Membership]

Risk Warning and DisclaimerThe market has risks, investment needs to be cautious. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of any user. Users should consider whether any opinions, views or conclusions herein fit their specific circumstances. Investment based on this is at your own risk. ```