FOR the first time in more than a decade, U.S. gasoline prices are tumbling toward US$2 a gallon even as the economy grows and unemployment shrinks, a constellation that will test the theory that domestic fuel demand is in terminal decline.

    Conventional wisdom holds that long-term trends such as increased fuel efficiency, greater urbanization and a graying population will temper any potential pickup in U.S. fuel consumption next year, despite the unexpected arrival of cheap fuel.

    Yet there are some signs that the bounce could be bigger than is widely assumed. As U.S. gasoline use accounts for about one-10th of global oil demand, an upside surprise could help put a floor under the biggest oil market selloff since 2008.

    U.S. motorists are driving more highway miles than any time since 2006; sales of new SUVs and pickup trucks are outpacing smaller, more fuel efficient models; and more travelers are choosing to drive this holiday season instead of flying.

    “Historically, the current situation — falling gas prices and a growing economy — is unusual,” said James Burkhard, vice president and head of oil market research for IHS CERA. “The single most important factor in gasoline demand is economic growth and strong employment, and that’s what we have right now.”

    The U.S. economy grew by 3.9 percent in the third quarter in a sign of improving economic — capping six months of the strongest expansion since 2003 — and lower crude oil prices, as a result of on slower global demand and the U.S. shale oil boom, may add half a percentage point or more to growth in the new year.

    Improving economic health is unlikely to restore the brisk growth in fuel demand that accompanied economic expansion for several decades.

    “Historically, when the economy grows, the oil demand grows. But the correlation is not as strong now,” said Christopher Knittel, a professor at Massachusetts Institute of Technology Sloan School of Management.(SD-Agencies)