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China Oil Use Seen Peaking in 2025

China Oil Use Seen Peaking in 2025 thumbnail

The country that’s driven global oil demand since the turn of the century may hit the brakes sooner than expected as travelers shift toward electric cars or even forgo the open road in favor of trains.

China’s oil consumption will peak in 2025, five to eight years earlier than market consensus, according to Morgan Stanley analysts including Andy Meng. The reversal will be driven by a transportation model unique to China: While most countries moving up the economic ladder show continued growth in oil demand from increased driving, mass-adoption of electric vehicles and high-speed rail in China will drastically reduce gasoline use, the bank said.

If the theory plays out, it could signal a huge shift for the oil market, which has relied on China for more than a third of global demand growth since 1999. An expanding body of research is painting a bleak future for oil, as rapid adoption of electric vehicles could mean global demand peaks by the 2030s, according to Bank of America Corp. and Royal Dutch Shell Plc, a prospect that’s likely to worry energy executives and investors.

“China will no longer be the growth driver of global crude demand,” Meng said in a March 5 report. “We believe the refiners and petroleum stations are the largest potential losers, while the battery companies are likely to become the key winners.”

To be sure, some of the industry’s top prognosticators expect the country’s oil demand to keep growing for years, albeit at a slower pace. The International Energy Agency sees China crude consumption expanding through 2040, while the nation’s largest energy producer China National Petroleum Corp. has forecast that gasoline use will peak five years before oil demand does in 2030.

Disruptive Force

China’s electric vehicle penetration will reach 6.4 percent by the end of the decade and keep rising to 80 percent by 2040, according to Morgan Stanley, adding that an aggressive push by local battery companies into technology innovation may speed up that timeline.

Meanwhile the country is seeing solid growth in high-speed rail ridership, driven by a well-developed network and severe traffic congestion. Highways’ share of passenger turnover fell to 27 percent last year from 55 percent in 2012. In the U.S., the figure was 87 percent last year, according to Morgan Stanley.

Electric vehicles and high-speed rail are “a disruptive force on China oil demand,” the analysts said. “This pattern has been ignored by most investors in developed markets as there is no such experience from any precedent.”


12 Comments on "China Oil Use Seen Peaking in 2025"

  1. FuelShoratgeComing on Sat, 9th Mar 2019 7:22 pm 

    Venezuela’s Guaido calls for massive protest as blackout drags on

    Go news for us Whites people. We are only 7% of the global population. It is about time the brown shit skin do something about. I hope a lot more will die and faster. Not enought brown shit skin are dying. Come on middle arab shit, kill each other more.

  2. Pete Bauer on Sat, 9th Mar 2019 7:37 pm 

    This is true. Their electric vehicle sales are rising at jet speed. In addition 10 % content in their petrol/gasoline is Methanol which is derived from coal and they are planning to run vehicles that can run on 100% Methanol.

    Look at this, a 140% increase in plugin sales while the overall vehicle sales fell 16%.
    Together the plugins, methanol and well connected rail network can drastically cut the oil consumption.

    A well connected high speed rail with local trains or pickup/drop of rental cars from train station will prompt many people away from highways. This is both cost saving and time saving if they travel in trains by night.

    In USA, there is 0 rental car service in train stations because the oil companies want to kill the railways.

    If IEA says that oil consumption in that country will increase until 2040, then its clearly International Rogue Agency.

  3. Cloggie on Sun, 10th Mar 2019 4:03 am 

    The nail in the coffin of peak oil supply. Excellent.

    Combined with self-driving cars, most oil and car companies won’t exist by 2030:

  4. Davy on Sun, 10th Mar 2019 6:50 am 

    “The nail in the coffin of peak oil supply. Excellent.”

    Clogged, we are not there yet so your cheerleading is propaganda reflecting your own personal emotional attachments. We have plenty of problems and peak oil dynamics is part of it. Cornucopian news is just fake until it is realized.

  5. Not me above on Sun, 10th Mar 2019 6:53 am 

    Davy on Sun, 10th Mar 2019 6:50 am

  6. JuanP on Sun, 10th Mar 2019 7:06 am 

    Not me above on Sun, 10th Mar 2019 6:53 am

  7. Davy Identity Theft on Sun, 10th Mar 2019 7:19 am 

    JuanP on Sun, 10th Mar 2019 7:06 am

  8. Mark Ziegler on Sun, 10th Mar 2019 1:52 pm 

    I seriously doubt it.

  9. Davy on Mon, 11th Mar 2019 6:35 am 

    “OPEC to Be Squeezed by U.S. Shale Until Mid-2020s, IEA Says” Bloomberg

    “America’s energy expansion will proceed, accounting for 70 percent of the growth in global production capacity through to 2024, the Paris-based IEA said in its medium-term report. By that time, the nation could be able to export 9 million barrels a day, exceeding the export capabilities of Russia and coming close to those of Saudi Arabia, the agency said. “The United States continues to dominate supply growth in the medium term,” said the IEA, which advises most of the world’s major economies on energy policy.”

  10. Robert Inget on Mon, 11th Mar 2019 2:58 pm 

    It’s the heavy oil from Venezuela and Canada
    that’s needed for distillates; Jet Fuel, Diesel, HO.

    As for those two suppliers; Venezuelan oil, missing in action. Canadian crude, pipeline constricted. Canada has been America’s enabler
    for years. Lately, Canada has been fighting back by restricting exports in order to get POO above BK levels.

    Now you know why $60 then $70 then $80 is the future.

    It will take longer to build pipelines from Alberta
    to West Coast or US ports than for Venezuela to get back to full production. (if ever)

    Rat know Venezuela has to get the lights on.

  11. John on Tue, 12th Mar 2019 10:17 am 

    China’s oil consumption peaking by 2025 looks a bit optimistic.

    Of the 4.2 million trucks and buses sold only 120 thousand were electric.

    The number of electric buses has increased considerably over the last few years but sales fell in 2017.

    These electric buses do not make up for China’s destruction of the fish stocks with it’s fishing subsidies.

    China’s fishing fleet can travel a thousand miles on subsidies. Areas where fish were safe from fishing and where numbers could replenish are being devastated.

  12. majece majece on Wed, 13th Mar 2019 12:26 pm 

    I am sure that on you will find information about writing functional resume. It will help you to get the job you want

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