May 11, 2023 | EVs Made the First Visible Dent into Gasoline Consumption

Gasoline consumption in the US dipped by 0.4% in 2022, from 2021, to 369 million gallons per day, all grades of gasoline combined, below where it had been in 2002, and down by 5.7% from 2019, and by 5.9% from the peak in 2018, according to data from the Energy Department’s EIA.

And yet, in 2022 employment grew by 4.8 million. And miles driven increased by nearly 1%. It’s not that economic activity declined or that people drove less. But they bought less gasoline:

When we look at a chart like this, in a country with substantial population growth over the years, our first reaction might go like this: I don’t want to be in this market. But refiners and gas stations are in this market.

We can see the impact of the big recessions on gasoline consumption: The double-dip recession in the early 1980s, the 1990/1991 recession, the Great Recession, and the lockdown period in 2020. Shallow recessions, such as the 2001 recession, didn’t make a visible gouge into gasoline consumption.

From about 2007 on, we can also see that something bigger is playing out here than just periodic recessions: Structural factors.

And yet, miles driven by all passenger and commercial vehicles, including those powered by diesel, ticked up 0.9% to 3.17 trillion miles in 2022, according to the Federal Highway Administration.

Miles driven haven’t recovered fully to 2019 levels (-2.8%) likely at least in part because of reduced commuting in the era of working from home. Many office workers are now either working from home entirely, or are going to the office on some days and working at home on others.

Why the drop in gasoline consumption despite more miles driven?

The primary long-term structural factor at work is the rising fuel economy of the vehicles in the national fleet. This started many years ago, and it continued in 2022…

Despite rising HP. Higher fuel economy despite more powerful vehicles as internal combustion engines and their control systems have come a long way:

Why the dip in gasoline consumption in 2022 from 2021, instead of further recovery from the 2020 lows?

Ah-ha, finally, a long-anticipated moment. The growth of EVs in the national fleet inched to the visible surface of gasoline consumption. EV sales in 2022 grew to a share of about 7% of total new vehicle sales in the US. In California, EV sales in 2022 accounted for 17% of total sales. These numbers are starting to show up at the gas station as a decline in gasoline sales.

Even though the market share of EVs in the US reached 7% in 2022, up from near 0% a decade ago, their share of the national fleet in operation is still minuscule, and for now, the impact on gasoline sales is small in the US overall. But we can finally see this first little dent.

The impact of EVs on gasoline consumption was bound to show up, and it was part of the mix in prior years, but at such low levels that it got lost in the shuffle.

Sales shift from refiners and gas stations to electric utilities.

Conversely, as gasoline consumption declined in 2022, electricity generated and sold to end-users in the US finally broke out of the 15-year stagnation and set a new record, in part because of EVs (there are also other new power-hogs, such as crypto mining, which has taken off in the US a few years ago).

Electric utilities, for years stuck in a no-growth business in many parts of the country, are licking their chops at the prospects of being able to sell more electricity:

Wolf Richter May 11th, 2023

Posted In: Wolf Street

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