With the price of oil breaching the $3.50 per gallon in all but one state, Americans are starting to reduce on their fuel consumption, reversing the steady growth in fuel demand as the economy steadily improves.

For the fifth straight week, Americans have reduced their spending on fuel compared to the previous year, according to MasterCard Spending Pulse, a group that monitors the volume of gas being sold at 140,000 service stations throughout the country. In the first week of April, fuel consumption was 2.4 million fewer gallons, a 3.6 percent decrease from last year. This was the biggest drop since December 2010 when people stayed at home due to snowstorms.

Prior to the decrease, demand for oil was on a steady increase for two months. Analysts predict that the trend will continue because the economy is recovering, with 216,000 jobs to be added in March. With more people seeking new jobs, MasterCard’s Director of Gasoline Research John Gamel said that gas will be in demand as more people will be driving.

A March survey by the Oil Price Information Service revealed that approximately 70 percent of major gasoline stations in the United States say that their sales have dropped. More than fifty percent reported a decrease of more than 3 percent, the sharpest since 2008, when gas surpassed the $4 per gallon mark.

Americans have also started to implement fuel consumption measures by switching to smaller, more fuel-efficient cars. This can be seen in the increase in sales of the Hyundai Sonata and Elantra to 55 percent in March as compared to the nearly 24 percent decrease of Chevy’s Suburban SUV.

According to Gamel, it is too early to predict whether this is the long-term decline in demand that the economy faced during the recession. Current prices have already reached the range when Americans chose to leave their cars in the garage or driveway. The decrease in fuel consumption began in October 2007 when US averages reached the $3 a gallon level. Still the decrease in the demand for fuel in the United States will not have an influence on the worldwide demand for crude oil, which continues to rise.

At the moment, global demand for oil is at 87 million barrels daily, equaling its highest level in 2007. It is projected to increase to over 88 million barrels a day by the end of 2011, majority of which will come from China.

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