U.S. gasoline consumption has already passed its peak of 20 million barrels per day in 2007, according to Exxon (XOM) CEO Rex Tillerson.
Due to the blending of biofuels and development of electric cars, he expects nothing but a downtrend in oil product demand towards 17 million barrels a day by 2020.
Reuters: “We think going forward that because of the emphasis on energy efficiency, ongoing improvements in vehicle miles standards and hybrid (cars), that motor vehicle gasoline demand is down, is headed down, and is going to continue to head down,”
For oil prices, developing nations are thus the long-term demand driver going forward. Luckily, they’re doing a good job at consuming like crazy already.
Yet back in the U.S., a major implication of falling gasoline consumption is that it likely means America might never need to build another greenfield (brand new) refinery again.
This need not be a bad thing for existing players. High construction costs and a dead long-term growth story will limit new competition. Current refiners such as Marathon Oil (MRO), Sunoco (SUN), and Valero (VLO) could be able to securely squeeze a lot of income from what will still be a massive, though declining, amount of US gasoline demand well into the future.
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