The Real Cause Of Peak Gasoline Demand

New analysis shows that fuel-efficient cars that utilize gasoline engines will lower oil demand more effectively than the widespread adoption of electric cars, according to an analyst from FGE who spoke to Reuters.

Though Asian and European nations have pledged a shift towards electric cars in the next decade, the biggest threat to oil prices is the implementation of stricter fuel standards, said analyst Cuneyt Kazokoglu.

“It will come, but it will come because of fuel economy, not electrification,” Kazokoglu said regarding the all-feared “peak” gasoline demand point.

FGE predicts that global gasoline consumption will drop by 11.3 million barrels per day due to increased fuel economy by 2040, dwarfing the 5.3 million bpd drop expected from the onslaught of electric cars or hybrids.

“[Gasoline demand] will inevitably peak in 15 years or so,” Kazokoglu said.

China, a country adamant to get electric cars on its roads, says it will not reach peak energy demand until the year 2040.

Previous estimates said the peak would be reached in 2035, but new figures suggest that five years later, demand would be at its highest at 4.06 billion tons of oil equivalent. Rising fuel needs stem from an increasing number of cars on Chinese roads, as a growing middle class adopts new luxuries in their daily lives.

Currently, China is second only to the United States in its overall energy consumption, but the nation’s high coal use causes it to emit almost twice as much carbon dioxide as the first-place consumer. A report by the CNPC earlier this year added that China’s oil demand will grow at a rate of 2.7 percent annually until 2020, after which it will slow to 1.2 percent until the end of the next decade.

Zainab Calcuttawala for Oilprice.com

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