Work from home continues to undermine road fuel demand

Now that almost all pandemic-era restrictions on personal mobility have been lifted, the most persistent remaining COVID-19 impact on oil use comes from working from home (WFH), the International Energy Agency (IEA) said, citing research results from EconPol.

A recent study from the European think tank reveals that WFH remains common, but there are large gaps between societies. Comparing the extent of WFH with changes in fuel demand since 2019 across countries shows that, where it is common, teleworking has substantially depressed road fuel demand, on a scale comparable to the impact of EV sales or efficiency gains over the same period.

The report by EconPol, an affiliate of Germany's Ifo Institute, is based on the survey responses of over 42,000 individuals from 34 countries. It estimates that the average adult worker spends about 0.9 days/week WFH, with English-speaking nations (Canada 1.7 days, the UK 1.5, the US 1.4, Australia 1.3) showing the highest levels.

East Asian societies (Korea 0.4, Japan 0.5) have lower WFH frequencies, while European and Latin American countries fall somewhere in between. Generally, survey participants express a desire to increase their WFH time, with an average preference of almost 2 days/week.

According to the report, there is a relatively clear relationship between the days of WFH in a country and its observed first-half 2019 to first-half 2023 change in estimated fuel demand for light duty vehicle (LDV), corrected for the impact of GDP growth and efficiency improvements.

The analysis suggests that for every additional day a week WFH per worker, overall LDV fuel demand dropped by about 4%, with a stronger effect amongst the countries where commuting is most dominated by automobiles.

For the economies covered by this analysis, these fuels accounted for a little over 21 million b/d of oil consumption in first-half 2019, suggesting an overall saving in usage of around 800,000 b/d. Because of the size of the US fuel market and its high incidence of WFH, this is highly concentrated in the US, where 500,000 b/d of fuel use is theoretically being avoided. Combined savings are comparable to the estimated total impact of EVs sold up to January 2023, casting increased WFH as a major structural factor behind underwhelming road fuel use since 2019.

Meanwhile, since the pandemic, the previously consistent relationship between the US Federal Highways Administration (FHWA) vehicle miles travelled (VMT) data and GDP has changed, with fewer miles now being driven per dollar of output. This decline in intensity closely mirrors the estimated impact of WFH and on adjusted fuel usage, the report said.