Even in the Age of Tesla, European Gasoline Demand Is Booming1 Sep 2023 07:38
Business is brisk at one of London’s top electric-vehicle charging hubs, owned by BP Plc, in the western suburb of Hammersmith. Spend time here watching how Tesla Inc.’s and competitors’ EVs come and go and you might leave convinced that gasoline’s days are numbered in Europe.Turn to the right, however, and that impression would vanish like disappearing ink: A conventional fuel station is doing even brisker business selling fossil fuels for conventional cars.Perhaps gasoline doesn’t have a future — but its present is rather healthy. Blame the lopsided world of cars and oil in Europe, where old and new trends collide in tense and counterintuitive ways.Consider fuel consumption. In the UK, gasoline demand was the strongest for the January-to-June period this year since 2015, according to Bloomberg calculations based on government data. In France, demand hit a 20-year high during the summer. In Spain, it’s risen to the highest in more than a decade. And in eastern European nations like Poland, it’s the strongest ever
How is this trend possible in Europe when EV sales are also surging? And does it reflect a swan song or a shift toward stronger-for-longer fuel consumption?To answer these questions, one must investigate the bowels of the region’s car and oil markets, which have changed beyond recognition since 2015, and how consumers drive those automobiles.For a time, European gasoline demand was dropping year after year, with oil executives assuming that consumption would fall somewhere between 1% and 2% per annum, driven by two factors: more efficient engines and the rise of diesel-powered vehicles, particularly in Germany and France. That trend changed around 10 years ago. First, gasoline use stabilized, and then it started to climb. Based on preliminary data, it looks like European Union gasoline consumption hovered this summer at a 10-year high.
The shift, from falling to plateauing to rising, has much to do with one of the biggest business scandals in recent memory.In 2015, Volkswagen AG, the German automaker synonymous with diesel cars, admitted it engines polluted more than the company had ever made public. The scandal, dubbed “Dieselgate,” soured European appetites for the cheaper but more polluting fuel. Gasoline became the choice for many in the continent, boosting demand.At the same time, Europeans were keeping their cars far longer than in the past, damping the impact of newer, more fuel-efficient models on overall consumption. Cost is one reason: New cars are pricey, and families are more budget conscious. Another was supply, with fewer new models due to chip shortages. Then add the fact that automobiles today are better built and thus age more gracefully than they did one or two decades ago. Finally, consumers fear choosing the wrong kind of vehicle as battery technology quickly advances, opting to delay their purchases as long as they can.
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