Get ready to kiss our love of gasoline good-bye, says the Wall Street Journal.
Gasoline consumption is projected to fall 6.9% this year as compared to 2007, and it may never return to its previous levels. The increased efficiency of new automobiles, coupled with the increased use of biofuels, and the decline in the size of the average commute all mean that gasoline consumption will sink.
That spells trouble for an economy built on the idea of growing gas use:
Federal gasoline-tax revenue fell 3% last year, according to the Department of Transportation. That plus other tax shortfalls left Congress having to plug an $8 billion hole last year in the Highway Trust Fund, previously kept flush by growing gasoline use.
The government is in a bind, as it doesn’t have many policies that encourage people to use more gas. It leaves them grasping for bad solutions like taxing miles driven as opposed to gallons of gas used. Perhaps the government should raise the tax on gasoline, but that’s not politically viable.
While our consumption drops off, it is picking up in China, which is where Exxon is headed next, says the Journal.
A very different scenario is playing out in China and other parts of the developing world. Exxon expects China’s passenger-vehicle fuel demand to triple by 2030, as the number of cars per capita grows along with its economy. The company is starting up a giant refinery complex in China that will feed a network of 750 gas stations.
In the U.S., Exxon is getting out of the business of gasoline retailing, where profits are shrinking, and leaving it to others to own and operate Exxon stations.
Of course, if China’s plan to sell hundreds of thousands of electric cars works out, then gasoline won’t be so popular there. Maybe we’ve hit peak gasoline.
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