Gasoline demand peaked, says global analyst

The forecast comes as automakers have recently turned to increasing their fleets of electric vehicles, after years of industry skepticism about whether car buyers would adopt all-electric models. General Motors Co. said it would stop selling gas-powered vehicles by 2035. Sweden’s Volvo Cars said it would be fully electric by 2030.

The world will have 60 million electric vehicles on its roads by 2026, the IEA said, up from 7.2 million in 2019. The agency follows EV trends closely as an important signal for demand for gasoline and crude oil.

The move towards electric vehicles was driven by government regulations, strong incentives in developed countries and greater consumer acceptance of technology, partly thanks to popular models like those sold by Tesla Inc.

EVs still represent a small proportion of the global fleet in the world, and automakers say they expect to see an increasing demand for gas-fired internal combustion engines, especially in the developing world, in the years to come.

The forecast comes at a time when the pandemic has raised global fuel consumption, raising questions about whether it will change the world energy matrix more generally in the coming years. Energy watchers have been debating for years the so-called peak oil, a point at which the demand for oil will begin to decline. Amid the demand-crushing pandemic that began last year, some analysts, including those from the Organization of Petroleum Exporting Countries, said that day may have already dawned in the developed world.

The IEA said on Wednesday that it sees global oil demand rebounding, reaching 104 million barrels a day in 2026, an increase of about 4% from 2019 levels, thanks to the developing world. Economic powers such as China, India and other Asian countries will account for 90% of the net increase in demand for oil over the next five years, the agency said.

But for the first time, the agency said it no longer envisages a complete recovery in demand for gasoline – the product that for years has sustained the world’s thirst for oil.

“We do not believe that gasoline consumption will return to 2019 levels,” said IEA Executive Director Fatih Birol. Global aviation fuel demand, however, will not recover to pre-pandemic levels before 2024, the agency said.

Amid widespread coronavirus restrictions imposed by the government on travel, the IEA said that daily gasoline demand fell to a record 2.9 million barrels in 2020, down more than 10% from 26.6 million barrels. barrels per day burned in 2019.

The acceptance of EVs is not the only thing that reduces demand. The IEA and the US Department of Energy, in a report last month, cited the improved fuel efficiency of gas cars. The U.S. agency said it expects American gasoline consumption in the transportation sector to peak in 2022.

The IEA said global demand for gasoline will begin to return as economies recover. But the move to EVs in richer countries is now accelerating at such a rate that declines in demand will outpace expected growth in developing countries like Indonesia, India and China.

Plug-in electric vehicles worldwide accounted for about 4.2% of new car sales last year, with sales growing 43% to 3.24 million vehicles, according to ev-volumes.com, a research group that tracks sales of electric vehicles. In Europe, where EV sales are on the rise, plug-in electric vehicles accounted for 10.5% of new cars sold in the fourth quarter of 2020.

“Electric mobility won the race,” Volkswagen Chief Executive Herbert Diess told reporters this week, as he revealed new major investments in car battery factories and electric charging stations.

Diess said battery powered electric vehicles would account for 50% of Volkswagen’s new car sales worldwide by 2030. He said, however, that in some markets conventional vehicles with an internal combustion engine would continue to dominate.

“We will continue to sell ICEs in some regions for longer than in others,” he said. “Electric mobility will arrive at different speed levels globally, depending on local policies and the supply of CO2-free energy.”

Write to David Hodari at [email protected] and William Boston at [email protected]