Gasoline Demand Going Forward; A Reply To A Reader-- January 28, 2021

A reader asked:

Do you think that there will be a permanent downward shift in gasoline demand because of the concurrent shift in people working from home (even after everyone (or enough) get vaccinated)? That's how I read the "gasoline demand" this past week. If you take millions of people off the roads daily and then keep them off the roads, that would explain a dramatic reduction in demand.

My answer: 

There will be a permanent downward shift in gasoline demand in the US. The question is how steep will the slope be and at what level will gasoline demand reset?

We have to make sure we are on the same timeline.

I've maintained that the pandemic in the US telescoped the years 2020 - 2035 to 2020 - 2025. 

With regard to gasoline demand:

• free market capitalism: folks will always be looking for better mileage;
• government mandates (CAFE standards): improved mileage mandated; Kyoto protocol back in play;
• government and mainstream media advocacy: ditto; that will translate into policies, incentives
• US population: minimal growth
• whether or not manufacturing returns to the US that won't affect gasoline demand all that much
  
• increased e-commerce
• delivery vans: low-hanging fruit gasoline and diesel fleets convert to EV fleets
• delivery by drones

In general, things don't change very quickly, so we will see gasoline demand trend toward historical levels by late 2022, if not a bit sooner, but after that annual gasoline demand will taper back to the level we are currently seeing. Might not see "final" reset until 2035.

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