Road transport fuels drive much of today’s oil demand

Demand is anticipated to broadly flatline in coming years before falling steeply from 2030 onwards, with net gasoline use expected to fall by 4.5 million bpd against current levels by 2040.

Europe, China and the US represent over half of current global gasoline demand. Consumption from these regions is not expected to rise further, with demand either falling, or remaining flat before shortly entering decline, in line with the pace of electrification and efficiency gains in their car fleets.

In China, significant progress in EV adoption means that gasoline demand has likely peaked, and could now decline to reach 2.3 million bpd by 2040.

In the US, gasoline demand is anticipated to remain broadly flat over the next few years. Before the end of the decade, consumption is expected to enter into decline, falling to 6.3 million bpd by 2040. In Europe, where gasoline consumption has been growing again due to the de-dieselisation of the car fleet, demand is anticipated to remain broadly flat at around 2 million bpd until 2030. From there it is expected to begin to decline and could reach 1.6 million bpd by 2040.

These regions are largely anticipated to remain market leaders in the adoption of EVs, assuming policy implementation remains supportive; and will provide a blueprint (of both successes and learnings) as the rest of the world electrifies its road transport.

By 2040, it is anticipated that gasoline demand in the EU, US and China will be roughly 5 million bpd lower than current levels. These markets will likely still account for a high proportion of gasoline demand – around 44% of global consumption by the end of the forecast compared to 55% today. Indeed, in 2040, the US is expected to remain the single biggest market for gasoline.

This highlights the challenge in reducing the proportion of internal combustion engine (ICE) vehicles in global fleets. By 2040, the total global car fleet is expected to increase by 550 million units to around 2 billion, with EVs and plug-in hybrid electric vehicles (PHEVs) still only likely to represent at most 38%1

Forecast based on regulation, consumer behaviour, technology improvements and stated ambitions by OEMs

of this figure despite rising global sales.

Gasoline demand in other regions has varying outlooks. Some countries, like Russia, will likely follow main markets with demand declining by 2030 or soon after. In other regions, including Africa and the majority of developing Asian economies, gasoline demand is expected to continue to rise into the next decade increasing by almost 1.8 million bpd by 2040 as their car fleets grow. At this point, these regions could represent almost a quarter of global demand, up from 14% today, while African demand is expected to peak after 2040.

The initial pace of decline is expected to be slow compared to gasoline, but begins to gather pace from 2035 onwards, with global consumption falling by over 1 million bpd to just under 19 million bpd by 2040.

The expected reduction in diesel consumption reflects progress in electrification of the light commercial vehicle (LCV) and bus segments. However, it will likely be constrained by limited success in electrification or adoption of transitional fuels by a growing heavy commercial vehicle (HCV) sector. This sector currently accounts for 70% of road diesel consumption, with the fleet expected to increase by over 30% to 314 million units by 2040.

Battery technology is unlikely to be sufficiently developed for electrification to present a commercially viable option for the HCV category in the medium term. The larger and heavier batteries required for HCVs reduce payload capacity, while charging requirements make electric HCVs less competitive than diesel in long-haul road transportation by impacting range and refuelling time.

The HCV sector is at a fork in the road of its decarbonisation journey; it may adopt an alternative solution like LNG or bioLNG, or wait for electrification to become more commercially viable. This could also apply to other segments like long range coach fleets.

From a lower base today, the electrification of these fleets is likely to reach a similar market share to cars by 2040.

Centralised decision-making will accelerate the pace of adoption for some commercial vehicles, particularly those following a back-to-base model, which do not rely on external charging infrastructure. The infrastructure for most commercial vans is similar to passenger cars; where this is in place uptake is likely to be higher.

While the bus segment is a small sector for global diesel demand, there will likely be success in the electrification of urban bus systems – expedited due to centralised decision-making. Given that the cost of electric buses compared to ICE equivalents is often lower, this is likely to occur even in locations where low-carbon transport solutions have not been prioritised.