Gasoline demand peaks, global forecaster says

The forecast comes as automakers recently pivoted to ramping up their electric vehicle fleets, after years of industry skepticism about whether car buyers would ever switch to fully electric models. General Motors Co.

said it will stop selling gasoline vehicles by 2035. Volvo Cars of Sweden has said it will be fully electric by 2030.

Some 60 million electric vehicles will be on the world’s roads by 2026, the IEA said, up from 7.2 million in 2019. The agency is tracking electric vehicle trends as a signal for gasoline demand and crude oil.

The switch to electric vehicles has been driven by government regulations, hefty incentives in developed countries, and wider consumer acceptance of the technology thanks in part to popular models like those sold by Tesla. Inc.

Electric vehicles still make up a small proportion of the global fleet, and automakers say they expect growing demand for gas-fired internal combustion engines, especially in developing countries, for years to come.

The coronavirus pandemic has disrupted global fuel consumption, raising the question of whether it will alter the global energy mix more broadly in the years to come. Energy watchers have long debated the timing of “peak oil,” when demand for crude will begin to decline. Amid the overwhelming demand pandemic that began last year, some forecasters, including those from the Organization of the Petroleum Exporting Countries, said that day may have already started in the developed world.

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

But for the first time, the agency said it no longer expected a full rebound in demand for gasoline – the commodity that for years sustained the global thirst for crude.

“We do not believe that gasoline consumption will return to 2019 levels,” IEA Executive Director Fatih Birol said.

Global demand for kerosene, meanwhile, would fully return, but at a slow pace and not until 2024, the agency said. Air travel to the United States has increased amid a stabilization or decline in Covid-19 cases in many parts of the country and an accelerated vaccination campaign. The Transportation Security Administration, which tracks the number of U.S. travelers passing through airport security checkpoints, recorded 1.4 million passengers on Friday. This marked a high in a year, but still less than half of comparable figures in 2019.

During government-imposed travel restrictions, the IEA said daily gasoline demand fell to a record 2.9 million barrels in 2020, down more than 10% from previous levels. 26.6 million barrels burned per day in 2019.

The adoption of electric vehicles is not the only thing to decrease the demand. The IEA and the US Department of Energy, in a report last month, cited improved fuel efficiency of gasoline-powered cars. The U.S. agency said it expects U.S. gasoline consumption in the transportation sector to peak in 2022.

The IEA has said global demand for gasoline will start to return as economies reopen. But the shift to electric vehicles in richer countries is now accelerating at such a rate that demand deficits in those countries are expected to exceed the expected growth of developing countries like Indonesia, India and China.

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

“Electric mobility has won the race,” Volkswagen CEO Herbert Diess said this week while revealing significant new investments in car battery factories and electric charging stations.

Battery-electric vehicles would account for 50% of Volkswagen’s new car sales worldwide by 2030, he said, but conventional internal combustion engine vehicles would continue to dominate in some markets.

“We will continue to sell ICEs in some areas for longer than in others,” Mr. Diess said. “Electric mobility will be done at different speed levels around the world depending on local policies and the supply of CO2-free energy.”

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