EIA details factors behind declining gasoline consumption in China

Gasoline consumption in China has declined in recent months due to rising electric vehicle sales, sluggish economic growth, and a declining population.

China's gasoline consumption averaged 3.2 million b/d in August 2024, a 14% decrease compared to August 2023, according to US Energy Information Administration (EIA) estimates. The downward trend persisted in September and October, both showing reductions from the same months in 2023. However, from January through July 2024, gasoline consumption in China exceeded that of the previous year.

“These trends led us to reduce our forecast growth in consumption of petroleum and liquid fuels in China in 2024 and 2025 in our Short-Term Energy Outlook (STEO). China’s growth of 100,000 b/d in 2024 and 300,000 b/d in 2025 will mostly be driven by petrochemical feedstocks instead of transportation fuels, reflecting increased petrochemical manufacturing in the country,” said Jeff Barron, an industry economist at EIA.

“Combined sales of hybrid vehicles, plug-in hybrid electric vehicles, and battery electric vehicles (BEV) were more than half of total passenger vehicle sales in China in October 2024, according to Bloomberg data. This share of sales is up from 40% in October 2023,” he continued. 

While the rise in BEV and plug-in hybrid sales is just one factor moderating recent gasoline consumption in China, ongoing market growth of these vehicles could weigh on future gasoline use.

“In China, typically between 20 million and 25 million passenger vehicles are sold every year. In the future, depending on future sales trends and the number of internal combustion engines decommissioned, BEVs and hybrids could make up a large portion of the total vehicle fleet in China. Although we do not forecast consumption for individual petroleum products such as gasoline or diesel in countries other than the US in our STEO, we factor in fundamental shifts that affect petroleum product consumption in our forecasts,” Barron said. 

In China, along with the increased sales of BEV and hybrid vehicles, factors like a declining population and slower economic growth have also curbed the growth in gasoline consumption. 

China's GDP is projected to grow by 4.1% in 2025, a decline compared with the 6.7% average growth rate from 2015 to 2019, before the COVID-19 pandemic, according to the latest forecast from Oxford Economics. Oil consumption is linked to economic activity, and slower GDP growth could be limiting gasoline consumption. Additionally, the decline in China’s population may decrease total miles driven and gasoline consumption.

China’s National Bureau of Statistics and General Administration of Customs publish monthly data on crude oil refinery processing, refined petroleum product output, crude oil and petroleum product imports, and crude oil and petroleum product exports. The agencies do not publish inventory levels or stock changes. 

“Because of this exclusion, we calculate China’s apparent demand of gasoline as refinery production of gasoline plus imports minus exports. This calculation is different from product supplied, our proxy for consumption in the US, which accounts for stock changes," Barron said.

"Despite lacking inventory data, China’s monthly petroleum statistics can serve as a useful guide for general trends in the country’s petroleum market,” he continued.