Petroleum Economics - Estimated Consumption of Petroleum Products in the United States after the War (T. P. 1730, Petr. Tech., July 1944)

The forecasts presented in this paper constitute an attempt by the writer to predict the pattern of the consumption of petroleum products in the United States during the period of transition from war to peace. Although, in preparing the estimates, secular trends were not overlooked, greater emphasis was placed upon considerations of a cyclical character, or upon influences which might be peculiar to parts of the period. The estimates do not extend beyond the year 1950 because by then conditions in the industry should have returned to normal. The consumption of petroleum products is affected, of course, by changes in the condition of business in general. Before estimates of petroleum consumption could be prepared, therefore, it was necessary to predict the pattern of general business during the period under review, particularly the economic series that in the past have shown the closest relationships with petroleum consumption. It is the writer's view that business activity in this country (as measured by industrial production) will be higher on the average during the period between the end of the war and the year 1950 than it ever was before during a peacetime period of the same duration. When the war is over, consumers will have saved amounts of money that will be very large as compared with any previous accumulations. There is little question, therefore, as to the financial ability of consumers to purchase goods. The production of many durable consumers' goods, such as automobiles, refrigerators and radios, has been completely stopped since early in the war; also, many semidurable and nondurable consumers' goods have not been available in the quantities or the qualities desired. There is considerable needi therefore, for consumers to purchase goods after the war. The important question is whether consumers will purchase goods in "1arge enough quantities to keep our economy running at a high level. The writer answers this question in the affirmative. The mere existence of very large consumer savings lends considerable support to this view because, with such backlogs of " security," consumers can afford to spend more of their current earnings than they otherwise could. Also, several polls have been taken, which indicate that consumers expect to buy large quantities of a variety of goods. Some of the savings, therefore, probably will go into current consumption. Even though this percentage is relatively small, so that the bulk of the funds accumulated by consumers during the war continues to remain as savings during the period under review, spending should be great enough to start the production cycle and keep it