The car industry is sailing through a sea change right now and Big Oil might start feeling like a stow-away very soon. The COVID-19 pandemic has made global oil demand plummet just as the EV era is getting underway. The International Energy Agency now forecasts that demand might never recover.
To be more specific, it’s the demand for gasoline that may have hit a peak. It might not recover. Gasoline consumption dropped 11 percent last year due to the pandemic, according to the New York Times. The lockdowns and restrictions drove many folks indoors and that much susses out both through lower consumption of gasoline and slightly lower emissions.
Gas consumption is steadily recovering, though. The difference is there seems to be a new ceiling for it which the IEA predicts to be around 2023, as the NYT details:
The agency said that gasoline consumption was expected to increase strongly in emerging markets like China and India in the next few years, but that beginning in 2023 it would likely decline in the large industrialized economies.
Take that in for a moment. That’s just two years away. I’ve had projects I’ve been holding off for longer than that.
Big Oil will live to fight another day, though, as the demand for crude oil is still expected to rebound. The IEA credits the petrochemical sector for the increase in demand, but it makes a caveat for gasoline:
The petrochemical industry will continue to lead demand growth, with ethane, LPG and naphtha together accounting for 70% of the forecast increase in oil product demand to 2026. Gasoline demand may have peaked, though, as efficiency gains and the shift to electric vehicles offset mobility growth in emerging and developing economies.
Later on, the IEA’s report specifically notes that these new forecasts are tied to changing consumer habits in the wake of the pandemic. Once again, the pandemic simply seems to have nudged us in a direction we had set out upon, and while we could always go back to our old ways, there are signs that things are changing. Those changes may be here to stay.