EDINBURGH, Scotland -- U.S. gasoline demand is set to peak in 2018, according to a recent analysis by research firm Wood Mackenzie.
The United States makes up one-tenth of global oil consumption. Analysts at the Edinburgh, Scotland-based research firm told Reuters that a combination of factors—more efficient vehicle engines, more hybrid and electric vehicles (EV), and the tough Corporate Average Fuel Economy (CAFE) standards—are factoring in to the demand peak and long-term decline.
After oil prices collapsed in 2014, U.S. gasoline demand exploded on lower retail prices and an improving economy, hitting a record 9.326 million barrels per day (bpd) in 2016. Wood Mackenzie analysts expect U.S. gasoline demand to peak at about 9.45 million bpd in 2017, stay around that same level in 2018, and then begin a permanent downward trend. This would begin with a fall to 9.28 million bpd in 2019.
"We expect gasoline engine efficiency to continue to improve through better deployment of batteries in hybrid vehicles," Alan Gelder, Wood Mackenzie analyst and global practice lead for refining and marketing, told Reuters. Higher oil prices projected over the long term will further dampen gasoline demand.
Global gasoline demand, meanwhile, should peak only a few years later, the analysts project. This is even as they expect the world’s vehicle fleet to grow more than 10% by 2025 to 1 billion vehicles.
Demand declines in the United States and Europe will counter growing demand and vehicle sales in Asia. The research firm expects global demand to peak at 25.89 million bpd in 2021. Gasoline makes up about one-quarter of oil demand.
The Reuters report noted that the question of when oil demand will peak is highly debated. Royal Dutch Shell, the second-largest oil and gas company in the world, and BP expect the peak to hit farther in the future, around the 2030s. The International Energy Agency projects oil consumption to grow for the short term but at a slower rate than in previous years.
Wood Mackenzie is projecting oil demand growth to shift from more than 1 million bpd to around 500,000 bpd over the coming decade, and transportation’s share to shrink, Gelder told Reuters.