Gasoline demand may never eclipse 2019 peak
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Global demand for gasoline may have peaked due to efficiency gains, the shift to electric vehicles and a drastic temporary reduction in its consumption due to Covid-19, the International Energy Agency’s (IEA) Oil 2021 report has found.
In last year's five-year outlook, before the impact of the pandemic was made clear, the IEA said that gasoline demand was approaching a plateau and kept its demand outlook figure steady from 2024 to 2025. However, remote working during the pandemic has seen demand fall significantly and commuting is likely to remain under previous levels for the next few years at least.
The IEA also said that demand for aviation fuels, one of the areas hardest hit by the pandemic, is forecast to gradually return to pre-crisis levels.
But a shift to online meetings and conferences – along with persistent corporate efforts to cut costs and hesitation by some citizens to resume leisure travel – could permanently alter travel trends and demand.
World oil markets have largely rebounded from the massive demand shock triggered by Covid-19 but still face a high degree of uncertainty that is testing the industry, the report found.
The forecast for global oil demand has shifted lower, and demand could peak earlier than previously thought if a rising focus by governments on clean energy turns into stronger policies and behavioural changes induced by the pandemic become deeply rooted, the report said. But in its base case, which reflects current policy settings, oil demand is set to rise to 104 million barrels a day by 2026, up 4 per cent from 2019 levels.
“The Covid-19 crisis caused a historic decline in global oil demand – but not necessarily a lasting one. Achieving an orderly transition away from oil is essential to meet climate goals, but it will require major policy changes from governments as well as accelerated behavioural changes. Without that, global oil demand is set to increase every year between now and 2026,” said Dr Fatih Birol, the IEA’s executive director. “For the world’s oil demand to peak anytime soon, significant action is needed immediately to improve fuel efficiency standards, boost electric vehicle sales and curb oil use in the power sector.”
Those actions – combined with increased teleworking, greater recycling and reduced business travel – could reduce oil use by as much as 5.6 million barrels a day by 2026, which would mean that global oil demand never gets back to where it was before the pandemic.
Asia will continue to dominate growth in global oil demand, accounting for 90 per cent of the increase between 2019 and 2026 in the IEA report’s base case. By contrast, demand in many advanced economies, where vehicle ownership and oil use per capita are much higher, is not expected to return to pre-crisis levels.
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