California to Slash Gasoline Consumption by 9% by 2020

By the end of the decade, California may cut gasoline consumption by 9% due to state policies and rapidly improving fuel efficiency. As Californians switch over to more efficient vehicles, they will be able to slash their gasoline consumption to 11.2 billion gallons in 2020, a drop of 1 billion gallons from 2013 levels, according to Bloomberg New Energy Finance.

California has been a pioneer in clean energy and energy efficiency policies, and several state laws will push California drivers towards using less gasoline. Back in the 1990’s, California required the production of zero-emissions vehicles, and the state has offered tax credits for hybrid electric and fully electric vehicles, allowing it to be the number one state for sales of those types of cars. More recently, California’s cap-and-trade program has taken effect, which requires large stationary sources of greenhouse gases to cut their emissions. Next year, the program will target the transportation sector, forcing fuel distributors to also cut their carbon pollution. 

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A greater penetration of alternative fuel infrastructure such as electric charging stations, as well as falling costs for hybrids and electric vehicles will allow drivers to further cut their fuel consumption. Greater efficiency and altered driving patterns has already led to a drop of 3 billion gallons per year of gasoline consumption since 2002.  

Bloomberg says that greater declines in gasoline demand will hit refiners in California, including ExxonMobil, Valero Energy Corporation, and Tesoro Corporation. “California will experience a significant shift in the make-up of both transport fuel demand and the composition of the vehicle fleet,” Salim Morsy, advanced transportation analyst at BNEF, said in the statement. “A drop in net fossil fuel demand may put pressure on California oil refiners’ margins in the coming seven years.” For this reason, it is clear why companies such as these vociferously opposed several of California’s green policies in the past.

By Joao Peixe of Oilprice.com