Crude demand expected to ease as US interest for gasoline falls

16 June 2010 21:13  [Source: ICIS news]

BERLIN (ICIS news)--Crude oil demand is expected to ease as the US moves to more efficient cars from around 2013, an industry consultant said on Wednesday.

Colin Birch, vice president of Purvin & Gertz, said demand for crude oil would remain high because of significant growth in China,  but he expected to see demand start to fall from 2013 as US interest for hybrid automotives shifted to more lighter weight, economical and efficient cars.

“Gasoline demand in the US remains very strong, but the US government is introducing corporate average efficiency targets which will mean cars can get to 40 miles per gallon rather than 30 miles per gallon by 2020,” Birch said in a speech at the 6th ICIS World Phenol-Acetone conference.

Although demand for crude in Asia was around 23m bbl/day, compared with North America at 19m bbl/day, gasoline demand in North America accounts for 50% of its overall crude demand.

Birch said he expected to see US gasoline demand decline “post 2015” as a result of fleet efficient cars. “This could be the end of the world for crude manufacturers,” he said in jest.

Birch said he expected crude prices to remain at current levels. Although he did not specify a time-line, he did not expect crude prices to drop.

“Long-term I don’t expect to see a return to the lower crude numbers. I think that it will stay at $70-80/bbl in order to restrain demand...the days of $20/bbl are gone,” he said.

In relation to the drop in gasoline demand, Birch said he did not see the need for complete refinery closures, maybe some partial closures, but he added that environmental groups were putting pressure on refiners.

John Keeley of International e-Chem, chairing the conference, concluded the day’s events by suggesting that the shift in US car choice could potentially help the petrochemical industry.

In his closing remarks on the first day of the 6th World ICIS Phenol Acetone conference, Keeley said, “Lighter weight vehicles could potentially mean an increase in olefin production - that’s good for all of us isn’t it?”

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By: Julia Meehan
+44 20 8652 3214

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