As motor vehicles become more fuel efficient and electric vehicles become more prevalent, gasoline consumption will decline, the International Energy Agency predicted in its “World Energy Outlook.”
IEA Executive Director Fatih Birol told Bloomberg Monday 150 million electric vehicles are expected to be on the road by 2040. The outlook predicted gasoline demand will fall to 22.8 million barrels a day by 2020 from 23 million in 2015. Demand is expected to edge up again by 2030 but then start falling as 2040 approaches.
Gasoline consumption has been rising since the 1950s as the automobile reshaped the U.S. landscape. From 1990 to 2015 gasoline consumption grew 20 percent despite competition from diesel. The IEA now calculates gas consumption will dip 0.2 percent in the next 25 years while the number of passenger automobiles doubles as automakers put their emphasis on electric vehicles.
Consumption set a one-month record in June, 9.7 million barrels a day, apparently spurred by lower crude oil prices, the U.S. Energy Information Administration reported. Consumption was high throughout the summer, increasing by 169,000 barrels a day compared to the same months last year.
“Overreliance on single-occupant vehicle travel and a failure to prioritize 21st century transportation solutions such as public transit, biking, and walking is having a profound impact on overall gasoline consumption and resulting emissions,” said John Olivieri, national campaign director for 21st Century Transportation at the United States Public Interest Research Group.
A senior executive at Royal Dutch Shell Plc said earlier this month, however, overall oil demand could peak in as little as five years.
Refiners are expected to suffer the greatest impact from falling gasoline demand since they have concentrated on gasoline output at the expense of other fuels.
“Refiners across the globe can only hope that [IEA] forecast turns out to be right -- because all the indications are today that consumption is going to begin dropping not in 2030, but probably in 2020,” Philip Verleger, president of the consultant PKVerleger LLC in Colorado and a veteran oil-market analyst, told Bloomberg. “It’s the best news a dying patient can hope to get.”
Michael Wojciechowski, vice president of Americas oil and refining markets research at Wood Mackenzie Ltd. in Houston, said refiners should target distillates as gasoline fades.
More than twice as much gasoline as distillate fuel currently is used, and together account for 65 percent of total consumption of refined products in the U.S., Market Realist reported.