Gasoline Demand in Transport in Non-OECD Asia
From 2000-2015, while OECD countries’ oil demand decreased by roughly 3 million barrels per day (mb/d), demand in non-OECD countries grew by around 21 mb/d. This represents an ongoing structural shift in oil demand dynamics that is characterised by two key developments: first, the rapid growth in China’s oil consumption from 2000-13, and second, the subsequent ‘jump’ in India’s oil demand growth – which overtook China’s in 2015 to emerge as the main engine of non-OECD Asian oil demand growth. The shift is particularly visible in gasoline demand – driven primarily by transport – which has defied expectations in terms of the sources of demand growth. Contrary to those expectations, the centre of growth has shifted from West of Suez markets to non-OECD Asia, which had previously been dominated by distillates. Average gasoline demand growth in Asia has nearly doubled from 130 kb/d a year from 2005-10, to 290 kb/d from 2011 onwards. As the emerging market economies of non-OECD Asia continue to industrialise, rising per capita incomes are likely to further underpin this structural shift. At the same time, climate change mitigation and growing concerns over poor air quality imply that non-OECD Asia’s economic growth will occur in a carbon-constrained world, and are unlikely to follow the trajectories of the OECD countries. This Insight summarises findings from a recent OIES Paper which investigates two research questions: first, what are the key drivers of gasoline demand growth in non-OECD Asia, based on historical trends? And second, what are the constraints to gasoline demand growth in this region? The first question is investigated through an analysis of statistical data on 19 countries in the Asia-Pacific region, of which over half are non-OECD. The second question, driven by local and regional policies, is investigated by looking in depth at the cases of India and China. While these economies are entering or are already in high growth trajectories with car ownership levels rising, oil demand growth in transport is likely to slow relative to a baseline, as policies to substitute away from oil in transport are implemented on a widespread basis. The paper provides broad insights into the drivers and constraints on gasoline demand in non-OECD Asia, focusing on the transport sector as a key variable.