The world’s top oil importer, China, could be just years away from its own peak in domestic demand for oil products, Chinese refiners have started to warn, but consumer preferences and government policies about transport electrification and support for EVs are likely to determine whether Chinese domestic oil consumption will peak around 2025.
China’s largest refiner, Sinopec, said at the end of last year that domestic demand for oil products would peak by 2025 due to COVID impacts and the rise of electric vehicles, Argus reported, citing Sinopec’s research think-tank as saying in its annual report.
“China’s oil products will enter a final growth phase before peaking in the next five years,” the Economics and Development Research Institute (EDRI) at Sinopec said, as carried by Argus.
According to the research institute, gasoline demand in China will likely peak in 2025, while demand for diesel could peak as soon as this year.
However, the growing sales of SUVs—which consume more gasoline—in China could delay a peak in Chinese demand, Nathaniel Taplin of The Wall Street Journal writes.
SUVs consume on average over 20 percent more energy than a medium-size car for the same distance traveled, the International Energy Agency (IEA) says, noting that last year sales of SUVs rose in China, as well as in the United States and Europe. The share of SUVs in the vehicle fleet continues to rise in China.
“While China’s oil use has a strong growth potential—given that China’s per capita oil use is currently around one-third of OECD levels—future growth rates will be tempered by efforts to tackle air pollution,” Michal Meidan, Director of the China Energy Programme at the Oxford Institute for Energy Studies, wrote in a comment in September 2020.
The government’s recovery package and its focus on electrification will weigh on oil demand in the medium term, while a possible shift from road to rail transportation is set to reduce diesel demand, Meidan said.