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

High oil prices are tearing open a gap in U.S. fuel consumption. In its latest proprietary research report, Barclays, based on its credit card transaction data, found early signs that Americans’ demand for fuel is beginning to shrink—both the number of times people refuel and the amount refueled per stop have fallen, and the suppressive effect of elevated oil prices on end-market consumption is gradually becoming apparent.

According to news from the Chase the Wind Trading Desk, citing Barclays’ analysis released on the 7th based on Barclaycard credit card data: under a rolling 30-day window, the total number of gallons of fuel purchased by U.S. consumers declined 8% year over year. Although total fuel spending increased 13% year over year, driven by an average oil price rise of 23% year over year, the contraction in consumption volume can no longer be masked by price factors. Using the AAA national average daily price for regular unleaded gasoline, the current year-over-year increase in oil prices has reached 27%, higher than 23% over the past 30 days, implying additional downward pressure on consumption volume going forward.

Barclays analysts noted that the trend above had already shown early signs in the first week after the outbreak of the Iran war, when oil prices began to skyrocket. By the fourth week of the war, total fuel consumption had officially turned to negative year-over-year growth. The demand-shrinking signals revealed by this high-frequency credit card data are of important reference value for assessing trends in commodities and the resilience of the consumer side.

What is also worth noting is that, according to the U.S. Energy Information Administration (EIA)’s official weekly data as of March 27, even under a four-week rolling window, gasoline demand still shows 1% year-over-year growth—unchanged from the initial period when the war broke out at the end of February—and it has not yet reflected a clear slowdown in demand. The divergence between the two sets of data highlights the leading advantage of high-frequency credit card data in capturing demand turning points.

Double contraction: refueling frequency and volume per stop fall in sync

The decline in fuel consumption is driven jointly by two channels: fewer refueling trips, and less fuel per refueling stop.

In terms of refueling frequency, over the past 30 days, the number of refueling trips per user has declined by about 1% year over year. Although the drop is small, it has already shown a clear downward trend since the first week after the war broke out. Historically, U.S. consumers refuel an average of about 3.5 times per month—roughly once every week to every week and a half.

Changes in the amount of fuel per stop are even more striking. The implied volume of fuel per transaction, historically highly stable at about 11 gallons, has fallen to about 10 gallons, a 7% year-over-year decline. Barclays pointed out that this is an extremely unusual change in historical data—the most direct behavioral response by consumers to high oil prices; when travel demand is relatively rigid, they choose to refuel less each time to control per-trip spending.

An abnormal phenomenon temporarily appeared early in the war: refueling frequency rose. Analysts believe this may have been caused by some consumers expecting oil prices to continue rising and choosing to “fill up” early to avoid higher costs. But as the war continued, this effect gradually faded; refueling frequency then steadily declined and turned to negative year-over-year growth. Taken together, Barclays believes the two indicators are enough to constitute early evidence that U.S. consumers are cutting back on fuel consumption.

Price elasticity estimates: theoretical forecasts suggest demand still has room to fall

Barclays’ commodities research team conducted a quantified analysis of the price elasticity of U.S. gasoline demand, breaking it down into two dimensions: the “driving mileage effect” and the “fuel economy effect.”

A multi-factor model analysis shows that for every 10% increase in oil prices, driving mileage falls by about 0.25% (elasticity coefficient about -0.025). After controlling for driving mileage, for every 10% increase in oil prices, gasoline consumption is further reduced by about 0.45% (elasticity coefficient about -0.045). Combined, the overall price elasticity of U.S. gasoline demand is about -0.7%—meaning that for every 10% increase in oil prices, demand declines by 0.7%.

Based on this, since the outbreak of the Iran war, oil prices have cumulatively risen by about 40%, which theoretically corresponds to a combined decline of about 3% in gasoline demand across both consumers and the industrial end. However, according to EIA data through March 27, under a four-week rolling window, demand is still up 1% year over year, which has not confirmed the above downside forecast.

Analysts also caution that if high oil prices cool broader economic activity, the real-world impact of price elasticity could be further amplified, and there is a risk that the extent of demand decline may exceed what the model predicts.

Data methodology: a high-frequency analysis framework supported by millions of transactions

The Barclaycard proprietary credit card data used in this analysis covers millions of active users and includes billions of transaction records, with historical data going back more than ten years. The analysis primarily focuses on transactions with merchant category codes (MCC) of “automated fueling machines” and “gas stations,” covering two types of scenarios: self-service fueling and payments made at the cashier.

Because credit card transaction data only records the transaction amount rather than the actual number of gallons, Barclays inferred consumption volume by using total spending and AAA average retail gasoline prices. To remove seasonal effects—especially fluctuations during the transition period from winter to the peak summer driving season—the analysis uses a year-over-year comparison.

As a reasonableness validation, Barclays’ calculated historical averages—about 11 gallons per refueling, and about 3.5 times per month—combined with an average fuel economy of about 25 miles per gallon, translate into about 975 miles driven per month, and about 12,000 miles annualized. This is highly close to the approximately 13,500 miles reported as the U.S. Federal Highway Administration’s estimated annual average for 2022, validating the representativeness and reliability of this dataset.

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