Gasoline gets a boost as cars gain favor over public transit
Driving — at least for now — is making a comeback, and that’s good for oil’s recovery.
As lockdowns ease and parts of the world reopen for business, driving has emerged as the socially distant transportation mode of choice and is offering some near-term relief to an oil market fresh off its worst crash in history and reeling from an unprecedented collapse in energy demand.
“People are using more their cars because they are afraid to use public transportation,” said Patrick Pouyanne, the chief executive of French oil giant Total.
It’s too soon to say whether this change is permanent.
In some parts of Asia that reopened earlier than the rest of the world, people are venturing back onto trains. And it’s unclear whether global gasoline demand will ever fully recover.
But on the streets of Beijing, Shanghai and Guangzhou, morning traffic is now higher than 2019 averages while subway use is well below normal, according to data compiled by BloombergNEF.
Volume on Beijing’s metro system is 53 percent below pre-virus levels. Subway use in Shanghai and Guangzhou is down 29 percent and 39 percent, respectively.
Air pollution returns
“At least at the beginning of our way back to normality, we expect a decrease in the use of public transportation,” said Josu Jon Imaz, the head of Spanish oil company Repsol SA.
It’s a phenomenon that may begin to reverse the dramatic reductions in air pollution the world’s busiest cities have seen in recent months as travel and industrial operations ground to a halt.
In Berlin, among the first European cities to relax its lockdown, public transit use remains down 61 percent while the number of people driving has recovered to 28 percent below normal, according to data from Apple Inc., which tracks requests for directions on its popular Maps app.
Apple Maps data for 27 world cities shows that driving directions are recovering more quickly than directions for mass transit.
In Madrid, driving is 68 percent below normal levels, up from about 80 percent in April, while use of public transport remains down 87 percent, largely the same level as last month.
In the U.S., gasoline consumption is clawing back from record lows, rising by 400,000 barrels a day during the week ended May 1.
Cities in Florida, one of the first American states to reopen, has seen fuel sales rebound to 30 percent below normal levels, from 50 percent weeks ago, according to the Florida Petroleum Marketers Association.
Summer travel
“I think maybe we will get a third of gasoline demand back relatively easy,” said Patrick DeHaan, an analyst at GasBuddy.
The rest will come back much more slowly, he said, perhaps taking a year or more. Some demand may never return.
Gasoline’s recovery may extend into summer amid changes in the way people vacation.
In the U.S., demand for long-haul recreational vehicles has picked up as people opt for road trips over air travel. Jon Gray, chief executive officer of RVshare, said bookings in some areas have more than doubled compared with last year.
“We saw an almost overnight doubling of bookings” as lockdowns showed signs of ending, he said.
Fuel distributor Pilot Flying J Inc. also has noted the trend. “People are thinking about their travel plans for this summer and many are considering road trips due to people feeling more comfortable driving,” said Chief Experience Officer Whitney Haslam Johnson.
Still, a look at cities that were early to reopen suggests that the spike in driving will be short-lived.
In Seoul, software developer Kim Jingi drove to work for a month and half after restrictions eased, in an effort to selfisolate. But for the last two weeks, Kim has returned to the subway.
“I thought it was safe enough,” Kim said. Also, “it was hard to find a parking spot.”