Gasoline demand hit by hybrid, EVs, tighter fuel standards
Peak gasoline demand in the United States is expected to hit in 2018 as engines become more efficient and hybrid and electric vehicles become more popular, according to a Wood Mackenzie analyst.
Demand for gasoline in the United States, which accounts for a tenth of global oil consumption, is expected to peak next year as engines become more efficient, Wood Mackenzie analysts said.
Global demand for gasoline, which accounts for more than a quarter of the world’s oil consumption, is set to peak as early as 2021 even in the face of relentless growth in the vehicle fleet, according to the Edinburgh-based consultancy.
A rise in the number of hybrid and electric cars such as the Nissan (7201.T) Leaf, Toyota (7203.T) Prius and Tesla (TSLA.O) as well as tighter fuel standards in Europe and the United States will contribute to a historic shift in consumption.
The United States saw spectacular growth in gasoline demand following the collapse in oil prices in 2014 and as its economy recovered from the 2008 financial crisis, reaching a record high of 9.326 million barrels per day last year.
Gasoline demand is expected to grow to peak of around 9.45 million tonnes in 2017 and remain largely unchanged in 2018 before slipping to 9.28 million tonnes in the following year, according to Wood Mackenzie.
“We expect gasoline engine efficiency to continue to improve through better deployment of batteries in hybrid vehicles,” said Wood Mackenzie analyst Alan Gelder.
An expected recovery in oil prices in coming years is also expected to curtail demand growth, he added.
At its peak, global gasoline demand is expected to reach 25.89 million b/d in 2021, accounting for roughly a quarter of oil demand.
The decline in US and European gasoline consumption will mask a steady expansion in demand in Asia, where most of the global increase in the vehicle fleet will take place.
While engine efficiencies increase, the global gasoline car fleet is expected to grow by more than 10 per cent by 2025 to above 1 billion vehicles, according to Wood Mackenzie.
Vitol, the world’s top oil trader, last month said it expected global demand for gasoline and diesel to peak in 2027-2028.
The question of when oil demand will reach its apex has been one of the most central and divisive for the industry, which faces the prospect of a world almost free of fossil fuels by the end of the century if a U.N.-backed plan to stem global warming is enforced.
Some companies, including Royal Dutch Shell (RDSa.L), the world’s second-largest oil and gas company, say oil demand could peak in the 2030s.
The International Energy Agency, the West’s energy watchdog, expects oil consumption to grow in the foreseeable future, albeit at much slower rates.
“We still see global oil demand growing but the role of transportation shrinks,” said Gelder.
Growth will be driven by the petrochemical sector, which uses oil feedstocks to produce plastics, as well as demand for diesel and gasoil from the commercial transportation sector, particularly buses, ships and planes, he added.
The world’s car fleet, including diesel cars and trucks, is set to grow by some 20 percent to 1.32 billion by 2025, according to WoodMac.
But the pace is expected to drop sharply compared to historic rates.
“Traditionally we had (annual) oil demand growth north of 1 million barrels per day. We are transitioning over the next decade to growth of around 500,000 bpd a year,” Gelder said.
(Reporting by Ron Bousso; Editing by Dale Hudson and Mark Potter)