Will Gas Demand Rebound to Pre-COVID-19 Levels?

The IEA points to a shift to EVs and increased fuel efficiency as denting demand.

March 19, 2021

Gas Pump

PARIS—Demand for gasoline might never return to pre-pandemic levels, according to the International Energy Agency (IEA) forecast, the Wall Street Journal reports. Driving the change is a worldwide shift toward electric vehicles and greater fuel efficiency, the IEA said in its five-year forecast.

The agency predicted 60 million EVs will be on the streets globally by 2026, up sharply from 7.2 million in 2019. Accelerating the trend are the recent commitments of some automobile makers, including General Motors and Volvo Cars of Sweden, to stop making gasoline-powered vehicles in the near future.

Over the past year, global fuel consumption has plummeted because of the coronavirus pandemic. “We do not think gasoline consumption will come back to 2019 levels again,” said IEA Executive Director Fatih Birol.

Meanwhile, AAA is predicting gas prices will begin to climb as more of the U.S. population receives vaccines—and begin to travel more as a result, WBRC-TV reports. “This is the time of year that demand starts to climb, when you get close to spring break and the weather warms up,” said Clay Ingram, spokesperson for AAA. “Our demand was so low last year that we basically had nowhere to go but up.”

The resulting lower supply might not make sense to consumers, who are beginning to see pump prices creep back up as refineries switch to the summer blend. As Jeff Lenard, NACS vice president of strategic initiatives at NACS, wrote in a recent NACS Daily story, “Gas prices are the ultimate pocketbook issue that everyone talks about. Songs are written about them. You don’t see that about eggs, bread or milk. Or property taxes, for that matter. Quite simply voters hate high—or rising—gas prices. That’s probably the main reason that the federal gas tax hasn’t budged since 1993 when it was increased to 18.4 cents per gallon.”

For more on gasoline and gas prices, visit the Fuels Resources Center.