Gasoline consumption may have already reached its peak
The International Energy Agency (IEA) recently released a report suggesting that worldwide gasoline demand may never return to pre-pandemic levels. In its analysis, IEA indicates that long-term shifts in gasoline consumption have occurred as a result of the COVID-19 pandemic, and will continue to impact oil markets in the future. Changes made by local and federal governments to cut carbon emissions will also contribute to declining oil demand. Governments worldwide are exploring sustainable economic recovery strategies including electric vehicle purchase incentives, providing cleaner public transportation options, and reducing overall dependence on oil.
Here’s Our Take
Global gasoline demand is currently being pulled in two directions. Population and economic growth, especially in emerging economies, is driving consumption up while fuel efficiency, alternative fuels, especially electricity, and improved fuel economy are pushing it down. The IEA may be correctly capturing a declining trend in gasoline use due to lower future growth in car travel, ongoing improvements in fuel economy, and shifts to electric vehicles. But this is still highly uncertain, as we emerge from a pandemic where there may be considerable pent-up demand and there is the possibility of returning to previous global growth trends. Still, if vehicle electrification accelerates in leading economies, prompting shifts to EVs over the next 5-10 years, this could relegate gasoline use to a permanently declining status. It is important to remember that this projection focuses on a peak in gasoline use, not overall oil consumption. Total global oil use, led by diesel fuel (mostly from trucking), jet fuel, and marine oil, along with industrial and petrochemical demand, will probably keep rising for years to come, leading to an overall increase in oil demand until at least 2030. It is important to recognize that even if gasoline consumption has peaked, there is still a desperate need to rapidly transition all of the world’s vehicles–cars, trucks and buses–to lower-emitting forms of energy, while simultaneously improving mobility for billions of people. Policy plays a key role. For additional information, see:
D Sperling, Lew Fulton, and Vicki Arroyo, “Accelerating Deep Decarbonization in the U.S. Transportation Sector,” in America’s Zero Carbon Action Plan: Roadmap to Achieving Net Zero Emissions by 2050, SDSN USA, October 2020, pp. 216-241.