Peak Gasoline Demand Looms with Engine Efficiency Gains
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 Leaf, Toyota Prius and Tesla 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.
"We expect gasoline engine efficiency to continue to improve through better deployment of batteries in hybrid vehicles," WoodMac analyst Alan Gelder said.
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 barrels per day (bpd) in 2021, accounting for roughly a quarter of oil demand.
The decline in U.S. 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 percent by 2025 to above 1 billion vehicles, according to WoodMac.
Vitol, the world's top oil trader, last month said it expected global demand for gasoline and diesel to peak in 2027-2028.
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, 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," Gelder said.
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.