Daily Energy Report
US gasoline demand, French strategic fuel reserves, US crude exports to Europe, Russia-Iran oil and gas swaps, Russia oil production cut and more
CHART OF THE DAY:
Figure (1) above shows the Energy Information Administration’s (EIA) forecasts of US motor gasoline demand through 2050 in the base case, taken from the EIA’s Annual Energy Outlook (AEO) 2023 released on March 16. The data was originally in quadrillion BTUs and we converted it to million barrels per day (mb/d).
The figure shows that gasoline demand will decline continuously until 2045 before it starts rising again slowly. By 2050, gasoline demand would have declined by about 1.45 mb/d or 19.1% from where it was in 2022. Most of the decline is attributed to the high penetration of electric vehicles and the improvement of the fuel economy of ICE vehicles. The rise following 2015 is attributed to higher miles traveled as population and incomes increased.
One of the basic assumptions of the base case is that vehicle miles traveled will increase by 23% between 2022 and 2050.
EOA’s Main Takeaway:
The chart above is significant in many ways. For one, despite the push for electric vehicles, the laws and massive subsidies by federal governments and states, as well as the stringent CAFE standards, gasoline demand declines by only 1.45 mb/d (9.1%) over a 28-year period. In short, claims about the death of oil demand are greatly exaggerated!
However, looking at the assumptions of the base case reveals a more striking picture: the EIA assumes that the cost of electric vehicles will continuously decline, and government subsidies will also continue through 2050. Both assumptions are questionable because they are at odds with data from the last two years. The EIA also assumes that laws in some states that seek to end the sales of new ICE vehicles will be implemented according to schedule.
To conclude, the EIA’s estimates of gasoline demand by 2050 show how much the impact of electric vehicles on oil demand is being exaggerated. But we believe that the EIA is underestimating gasoline demand since its assumptions are no longer realistic.
STORY OF THE DAY
“France started tapping into its strategic fuel reserves, the government said on Tuesday, amid strikes by workers at refineries and depots that have stunted production and blocked deliveries,” Reuters reported.