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Page added on October 27, 2015

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U.S. And China Still Driving Demand Higher

Consumption

Despite prognostications otherwise, gasoline demand in the United States and globally continues to grow. Lower gasoline prices combined with net additions to the global fleet of vehicles powered by gasoline mean that despite increases in sales of electric and hybrid vehicles, gasoline demand will likely continue to grow in absolute terms in the near future.

U.S. and Chinese Consumers Buying Bigger Cars

Low gasoline prices in the United States has not only induced demand growth at the fastest year-over-year rate in 14 years but also the highest increase in auto sales in more than 10 years. U.S. consumers are also electing to buy heavier SUVs so the new fleet mix demands relatively more gasoline than anticipated by analysts in the past.

While less robust than predicted prior to the recent Chinese economic slowdown, Chinese auto sales remain the highest volume of all nations. Chinese buyers have also elected to buy a greater percentage of SUVs and other heavier vehicles that use more gasoline relative to light weight passenger vehicles.

Chinese Vehicle Fleet Young And Growing

Growing from 2 million units in 2001 to over 23 million in 2015, the Chinese vehicle fleet is among the youngest in the world. As vehicle quality improves and a used car market grows, new vehicle sales are more likely to create a net increase in the size of the Chinese vehicle fleet, generating a rapid increase in long-term gasoline demand. Electric and hybrid vehicles are not popular with Chinese buyers and will likely remain a small percentage of net additions to the Chinese vehicle fleet for many years to come.

Emerging Markets And Global Growth In Middle Class Likely To Demand More Gasoline

Outside of China, emerging market vehicle sales have stabilized and may have resumed growth. Long-term and substantial growth in the global middle class consumer segment will likely increase global demand for gasoline for the near future.

Could VW Scandal Reduce Diesel But Increase Gasoline Demand?

The VW emissions scandal is causing vehicle emissions regulators globally to rethink the role of diesel fuel in the global demand mix. Prior to the scandal many analysts forecast robust diesel growth not only in passenger vehicle use but also for freight and construction vehicles. Given the high percentage of diesel passenger vehicles in the European Union, revised air pollution regulations could increase gasoline demand relative to diesel in the near future. Outside of the EU, diesel vehicle sales constitute a much smaller percentage of passenger vehicle sales, so even if the global fleet mix changes, the effect on gasoline sales will not likely be as significant.

Because diesel contains more energy per volume than gasoline, heavy freight trucks and construction vehicles are likely to be powered by diesel for the foreseeable future. Constructing the infrastructure necessary to sustain and grow the global middle class mean that diesel demand will likely increase even if the passenger vehicle mixes skews more gasoline-centric than forecast prior the VW scandal.

Forbes



10 Comments on "U.S. And China Still Driving Demand Higher"

  1. shortonoil on Tue, 27th Oct 2015 10:26 am 

    Like we have been saying for some time, “a 3% increase in consumption on a 55% decline in price is not an increase in demand, it is, A GOING OUT OF BUSINESS SALE!

    If the petroleum industry can’t do any better than that, they are in BIG, BIG trouble!

    http://www.thehillsgroup.org/

  2. Mike616 on Tue, 27th Oct 2015 12:42 pm 

    Forbes = Unreliable.

  3. Mike616 on Tue, 27th Oct 2015 12:48 pm 

    What we’ve learned in the last decade, from Monsanto to Exxon to Fox Idiots.

    Corporate “science” is Junk Science.
    Corporate “news” is Junk News.

  4. apneaman on Tue, 27th Oct 2015 1:06 pm 

    BP shrinks further to weather extended oil slump

    http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/bp-shrinks-further-to-weather-extended-oil-slump/article26998399/

    BP cuts costs, bracing for $60 barrel oil until 2017

    “The company is now planning for around $60 per barrel price for Brent crude until at least 2017, after a sustained fall in the price of the commodity over the past year.”

    http://www.cnbc.com/2015/10/27/bp-q3-underlying-rc-profit-182b-vs-304b-for-q3-2014.html

    The best laid plans.

    Bracing for $60 while stuck in the mid $40’s in a deflating economy. That’s like bracing for a car crash at 50 mph while going a 100 mph downhill with no brakes. Maybe they will start working again if we hope hard enough.

  5. Mark Bucol on Tue, 27th Oct 2015 8:35 pm 

    This article has an error in the reference to China vehicle fleet. It says that has grown from 2 million to 23 million over the last 15 years. These numbers refer to the annual “additions” to vehicle fleet not fleet size, which is over 200 million and on par with the US vehicle fleet quantity.

  6. makati1 on Wed, 28th Oct 2015 3:10 am 

    Mark… The Us has over 240 million cars, not 200 and where do you get the Chinese figure?

    This is all I can find that is recent:
    “As of this week, the number of Chinese motor-vehicle drivers was poised to break past 300 million people, according to the country’s top law-enforcement agency, including 244 million licensed passenger-car drivers. The U.S., by comparison, has about 319 million men, women and children, and nearly 212 million licensed drivers.

    Meanwhile, China has 154 million private autos, next only to the U.S., said the ministry. The U.S. government puts the number of cars and trucks there at around 240 million, suggesting China still has a ways to go before it can fill parking lots the way Americans do.”

    http://blogs.wsj.com/chinarealtime/2014/11/28/china-soon-to-have-almost-as-many-drivers-as-u-s-has-people/

    Drivers do not equal vehicles.

  7. shortonoil on Wed, 28th Oct 2015 12:46 pm 

    Of course Forbes would put this article out a day before the story is released that the Chinese have tankers waiting to be unloaded, but have no place to put the oil?

    http://www.zerohedge.com/news/2015-10-28/crude-tipping-point-arrives-china-runs-out-space-store-oil

    Their next story will have to be that Saudi Arabia has signed a 200 year contract with the Martians!!

    We have been stating for over a year that the Etp Model informs us that the general economy can no longer absorb all the oil that producers can extract. It now requires more energy to produce the oil, and its products than is delivered to the general economy. On an energy balance equation the producer side is greater than the economy’s side. The entropy state of the production side has become higher than the state of its destination. Inventories will continue to grow, and price will continue to fall. The energy half way point of 2012, as described by the Model, was the beginning of the end of the oil age. Also, as we have pointed out here several times, Central Bank policy can not correct the situation. It can only make matters worse. Printing excess liquidity will only help to finance additional production for which there is no market.

    http://www.thehillsgroup.org/

  8. BC on Wed, 28th Oct 2015 4:31 pm 

    @short: Their next story will have to be that Saudi Arabia has signed a 200 year contract with the Martians!!

    The Martians will have to get in line behind the aliens from The Rings of Uranus.

    But they will both be faced with paying the going price for abiotic oil from the center of the Earth on which the reptilians have a monopoly at $10,000/bbl.

    At that price, the reptilians will outlive human apes during the next mass extinction; but turnabout IS fair play, after all. 🙂

  9. BC on Wed, 28th Oct 2015 5:32 pm 

    @short, another way of saying it is that we’re financing unprofitable extraction of costlier, lower-quality crude oil substitutes at a discount rate of ~0% of what we won’t be able to afford at today’s cost of supplies in the future to permit growth of real GDP per capita AND growth of production of the same unprofitable crude oil substitutes.

    IOW, Peak Oil, LTG, and EOG.

    The so-called “glut” of “oil” is really “depletion” of the FV of “oil” substitutes we can’t afford in order to maintain real GDP per capita, let alone grow same AND future supplies of kerogen and tar.

    The big oils, Fortune 25-100 CEOs, Pentagon planners, CIA, NSA, SIS, German MAD, NATO, and the Russian, Japanese, and Chinese military planners all know this.

  10. MrNoItAll on Wed, 28th Oct 2015 7:31 pm 

    That’s right, BC. What we see here is a short-term plan which is clearly intended to buy time. In other words, yes indeed, we ARE living on borrowed time. The surreal suspense is electrifying!

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