Gasoline, diesel and jet fuel demand in the US has or is about to reach its peak, with refineries expected to shift output slates in response to the change, according to the chief executive of US refiner Phillips 66.
"We absolutely believe that in the US we've hit peak gasoline demand," Mark Lashier said this week during an event at Rice University's Baker Institute for Public Policy in Houston, Texas. Peak US demand for diesel and jet fuel will follow in the "not to distant future," he said.
Still, given the relatively inexpensive cost of refining in the US — in part due to cheap domestic natural gas — the country will continue to export excess refined products, Lashier said. The US has exported about 890,000 b/d of gasoline this year, 15pc above the five-year average, according to the US Energy Information Administration.
With Lashier expecting US gasoline demand to decline at a faster rate than demand for diesel and jet fuel, Phillips 66 is considering how it can adjust the output slates at its refineries to keep pace with shifting consumption patterns.
In its International Energy Outlook released yesterday, the EIA said electric vehicle adoption is set to erode gasoline demand but it expects global economic growth to increase air travel through 2050. This will push refiners to shift output slates to more jet fuel production, the agency said.
Average US gasoline demand this year has hovered above its five-year average at 8.6mn b/d following a sharp recovery in the wake of the Covid-19 pandemic, based on weekly refined product supply data from the EIA. The agency forecasts an average 8.69mn b/d of US gasoline demand in 2024, according to its September Short-Term Energy Outlook, also released yesterday.
The EIA earlier this year forecast that summer gasoline demand in the US would not recover to pre-pandemic levels, a view shared by independent refiner Marathon Petroleum which said in January that a 3pc deficit to pre-Covid levels is likely.
Weekly EIA data is prone to sharp swings in demand, while the EIA monthly data released at a lag provides a more accurate picture of US demand levels. Analysts at Bank of America noted in a July report that the weekly numbers have consistently understated demand by 150,000-200,000 b/d compared to the monthly report.
