Peak Gasoline demand looms with Engine Efficiency gains

On March 2nd, demand for gasoline in the United States, which consists of a tenth of global oil consumption, is forecasted to peak next year as engines become more efficient. Global demand for gasoline, which is responsible for more than a quarter of the world’s oil consumption, is fixed to peak as early as 2021 even in the face of ruthless growth in the vehicle fleet. An increase in the number of hybrid and electric cars such as the Nissan Leaf, Toyota Prius and Tesla as well as fuel tighter standards in Europe and the United States will add to a historic change in consumption.

The United States saw enormous growth in gasoline demand after the fall in oil prices in 2014 and its economy recovered from the 2008 financial crisis, reaching a high record of 9,326 million barrels per day last year. Gasoline demand is forecasted to grow to around 9.45 million tonnes in 2017 and stay largely unchanged in 2018 before slipping to 9.28 million tonnes in the following year, according to WoodMac. “We expect gasoline engine efficiency to continue to improve through better deployment of hybrid vehicles,” WoodMac analyst Alan Gelder said. An anticipated recovery in oil prices in subsequent years is also predicted to limit demand growth, I have added.

At its peak, global gasoline demand is predicted to reach 25.89 million barrels per day (bpd) in 2021, making up approximately a quarter of oil demand. The weakening in U.S. and European gasoline consumption will cover consistent expansion in demand in Asia, where most of the global increase in the fleet will take place. While engine efficiencies increase, the global gasoline fleet is predicted to grow by more than 10 percent by 2025 to above 1 billion vehicles, according to WoodMac. Vitol, the world’s top oil trader, last month said it forecasted global demand for gasoline and diesel to peak in 2027-2028.


The question of when oil demand will reach its climax has been one of the most central and disruptive for the industry, which faces the prospect of a world almost free of fossil fuels by the end of the century if a UN-backed global plan to stem Warming is imposed.

Some companies, including Royal Dutch Shell, 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, anticipates oil consumption to increase in the near future, however at much slower rates. “We still see global oil demand growing but the role of transportation shrinks,” Gelder said. Growth will be motivated by the petrochemical sector, which uses oil feedstocks to produce plastics, as well as demand for diesel and gasoil from the commercial sector, particularly buses, ships and plans, I have 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 forecasted to collapse sharply compared to historic rates. “Traditionally we had (annual) oil demand growth of 1 million barrels per day. We are transitioning over the next decade to about 500,000 bpd a year,” Gelder said.

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