Gasoline sales have already stagnated for years due to a big drop in demand.
By wolf richter For wolf street,
Gasoline consumption in the US is expected to fall 0.4% in 2022 to 369 million gallons per day in 2021, for all grades of gasoline combined, about where it was in 2002, and down 5.7% from 2019, and down 5.9% Went. peaked in 2018, according to EIA data from the Department of Energy.
And yet, employment is projected to increase by 4.8 million in 2022. And miles driven increased by about 1%. It is not that economic activity has declined or people have driven less. But they bought less petrol:
When we see a chart like this, in a country that has experienced substantial population growth over the years, our first reaction might be: I don’t want to be in this market. But there are refiners and gas stations in this market.
We can see the effects of the major recessions on gasoline consumption: the twin recessions of the early 1980s, the 1990/1991 recession, the Great Recession, and the lockdown period in 2020. Shallow recessions, such as the 2001 recession, did not create a visible gouge in gasoline consumption.
Since about 2007, we can also see that there’s something bigger going on than just periodic recessions: structural factors.
And yet, miles traveled According to the Federal Highway Administration, all passenger and commercial vehicles driven, including those powered by diesel, tick up 0.9% to 3.17 trillion miles in 2022.
Miles driven haven’t fully recovered to 2019 levels (-2.8%) due to reduced commuting in the work-from-home era. Many office workers are now either working entirely from home, or going to the office some days and working from home some days.
Why the drop in petrol consumption despite driving more miles?
The primary long-term structural factor at work is the increasing fuel economy of vehicles in the national fleet. It started many years ago, and it continues in 2022…
Despite increasing HP. High fuel economy has come a long way despite more powerful vehicles as internal combustion engines and their control systems:
Why petrol consumption will decline in 2022 compared to 2021, instead of further recovery from 2020 low,
Ah-ha, finally, the long-awaited moment. The growth of EVs in the national fleet has reached the visible surface of gasoline consumption. EV sales grow to account for about 7% of total new vehicle sales in the US in 2022. In California, EV sales to account for 17% of total sales in 2022, These numbers are starting to show up at the gas station as petrol sales decline.
Even if the market share of EVs in the US reaches 7% in 2022, up from nearly 0% a decade ago, their share of the national fleet in operation is still very low, and for now, the impact on gasoline sales is small. Overall in the U.S. But we can finally see this first little dent.
The effect of EVs on gasoline consumption was bound to be visible, and it was part of the mix in years past, but at such a low level that it got lost in the shuffle.
Sales shifted from refiners and gas stations to power utilities,
In contrast, due to the decline in gasoline consumption in 2022, Electricity generated and sold to end users in the US finally breaks out of 15 years of stagnation and sets a new recordPartly because of EVs (there are also other new power-hogs, such as crypto mining, which took off in the US a few years ago).
Electric utilities, stuck in no-growth business for years in many parts of the country, are licking their chops at the prospect of being able to sell more electricity:
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