China's gradual shift toward electric vehicles will bring about domestic gasoline demand peaking either this year or next, according to the top executive of the world's largest independent oil trader, Vitol Group.
"Gasoline is likely to peak this year or next year in China - not because nobody's moving, but simply because the fleet is slowly changing towards electric vehicles," Vitol Group's CEO Russell Hardy told Bloomberg in an interview published on Monday.
Earlier this year, Vitol pushed back its expected timeline for global peak oil demand beyond 2030. Hardy said in February that a slower pace of the energy transition would push peak oil demand beyond 2030.
Nevertheless, Vitol sees weakening Chinese gasoline demand growth and diesel demand due to the electrification of transport and greater use of LNG for fueling trucks.
Demand for petroleum products in China could peak before next year, the research unit of the China National Petroleum Corporation (CNPC) forecast earlier in 2024. The projection is based on expectations that the energy transition will continue gathering speed, eliminating oil product demand growth.
China Petroleum & Chemical Corporation, or Sinopec, expects oil demand in China to peak before 2027, according to the 2024 edition of the China Energy Outlook 2060 of Asia's biggest refiner.
In its previous outlook last year, Sinopec said that China's oil consumption is expected to peak at some point later this decade, between 2026 and 2030, due to an acceleration of EV adoption.
This year, road fuel demand in China has been weaker than expected, especially diesel consumption, amid the property crisis and a structural change in transportation as an ongoing shift to LNG-powered trucks limits diesel use for transportation, slowing overall oil demand growth.
For the first half of this year, Sinopec flagged "severe challenges brought by the weak market demand and narrowing margin of certain products."
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
Comments
China's economy is not growing like it used to just a few short years ago. As growth slows, so does demand for things such as gasoline.
China's growth trajectory is hampered by two main things:
Declining Population - Due to its disastrous one-child policy, China has built and armed its own demographic time bomb. As the population slowly declines, expect less gasoline to be needed by fewer (increasingly older) people.
Chinese Economic Policy - Most of this decline in growth is due to President Xi's (highly disjointed from reality) policies. However, unlike the demographic time bomb that is baked in the cake, these policy mistakes can be reversed. Of course, that means either Xi changes his mind (and loses face) or he is deposed (highly unlikely the way he has rigged the CCP leadership rules).
So one self-inflicted wound that is beginning to bear fruits and a second scattershot of wounds that will bear fruit over the next few years. Yes, gasoline demand will fall, but not because of EVs.