conomic growth and the rise of electric cars and trucks, but the recent decline is especially steep and has caught industry players by surprise. Goldman Sachs estimates the drop in gasoline and related products use was about 20 per cent in April, while China-based GL Consulting put the decline at around 15 per cent. Unlike during the pandemic, Chinese people are not moving around less. Instead, they are changing the way they travel: rail journeys grew by around 10 per cent in March and April this year, compared with around 5 per cent last year, according to Ministry of Transport data. Travel by subway or taxis, which are electrified in many cities, is also growing rapidly, the data shows. China’s EV fleet, by far the world’s largest, also saw greater use in April. Charging rose 69 per cent from a year earlier to an all-time high, according to the state-backed China Charging Alliance. The figures indicate that China can operate on less fuel than previously thought, reducing the need for imported oil. About half of China’s crude oil consumption is refined into diesel or gasoline. “It looks like consumers have made a quiet economic choice. Faced with higher gasoline, diesel and airfare, many seem to have shifted away from oil-based transportation,” JP Morgan analysts wrote in late May. China has cut crude imports drastically since the start of the war, in part by dipping into stockpiles built while prices were low, easing the crunch from the near-closure of the Strait of Hormuz and putting a lid on prices. May oil imports slumped 29 per cent to their lowest in eight years at 7.8 million bpd, following a 20 per cent tumble in April. While those levels are unsustainable without China further tapping reserves, analysts say the possibility that behavioural changes will persist and hasten the decline in fuel use has significant implications for global oil demand and a Chinese refining sector already facing overcapacity. Gasoline and diesel demand is now much more elastic in China thanks to EVs and the electrification and prevalence of mass transit, said S&P Global analyst Minmin Hu. “The drop in fuel consumption during the Covid period was due to mobility constraints,” she said. “The difference now is that demand is declining spontaneously.” Diesel and the property crisis Rising prices add to the decline in diesel consumption caused by China’s five-year property sector crisis. An independent fuel trader surnamed Zhang in Guangdong province said some local government-funded construction projects are struggling to fund diesel purchases for land-levelling as prices rise and budgets tighten. His company’s diesel and gasoline sales have halved in the past few months, he told Reuters. Another fuel trader in China’s southwest, surnamed Song, said demand from logistics, mining and industry had dropped considerably while many construction clients had “disappeared entirely”, having already swapped their diesel trucks for electric vehicles. Will it last? Sinopec expects national demand for gasoline, diesel and jet fuel to fall around 10 per cent year-on-year in the second and third quarters, according to an industry source briefed by Sinopec. They declined to be named because they were not authorised to speak to the media. S&P told Reuters it expects a similar drop in the second quarter. In February – before the war – the refiner forecast that diesel and gasoline use would fall by 6 per cent and 5 per cent, respectively, this year. Sinopec did not immediately respond to questions about its forecasts. EV use continues to grow. The transport ministry said about a quarter of all vehicles on highways during the May Day holidays were electric or hybrid, a third more than last year. Ride-sharing company Didi told Reuters that half its car rental bookings during the May holiday were for electric or hybrid vehicles, just over double the number over the same period last year. “The open question remains whether any of this is permanent,” Rystad said in a note. “Our reading is that for gasoline, at least part of it is.” Reporting by Chen Aizhu in Singapore, Sam Li and Lewis Jackson in Beijing; Editing by Tony Munroe and Kate Mayberry. All courtesy of Reuters. Further reading: How should retailers react to a potential deal to end the Iran war?