The global gasoline demand growth is projected to halve by 2024 due to the surge in electric vehicles (EVs) in China and the United States. This shift is anticipated to put a squeeze on second-half refinery margins.
What Happened: Analytics firm Wood Mackenzie (WoodMac) forecasts that demand will rise by 340,000 barrels per day (bpd) this year, marking the lowest growth since 2020, Reuters reported on Monday. This is a notable decline from last year’s growth of 700,000 bpd.
The decelerating demand is linked to the growing penetration of EVs in the U.S. and China, according to WoodMac analyst Sushant Gupta.
This year, Chinese demand is expected to grow by only 10,000 bpd due to higher EV uptake.
According to the International Energy Agency (IEA), China, once the world’s driver of gasoline demand, is projected to account for more than half of all EV sales this year. As falling prices spur demand, the share of electric cars sold this year could reach 45% in China, about 25% in Europe and more than 11% in the U.S.
Meanwhile, the U.S. gasoline consumption fell to about 376 million gallons per day in 2023, and demand in 2024 is expected to be flat. This is likely to keep U.S. refining margins under pressure after the peak summer driving season.
Why It Matters: The incentives for EVs are improving, which was $6,000 as compared to $2,000 for ICE vehicles. Moreover, there is a boom in demand for hybrids.
Gas prices at the pump are on the rise and could lead to a higher national average next month, exacerbating inflation concerns and lowering the prospect of interest rate cuts during the first half of 2024.
The U.S. car market saw a fascinating shift in 2023. While Ford Motor solidified its lead, Tesla’s surge in each state was the most eye-catching, suggesting a growing appetite for electric vehicles despite an overall slowdown in demand.
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