The commodities team at Citi on Wednesday analyzed new U.S. tailpipe emission standards for light and medium cars and concluded that the regulations could displace another 50,000 barrels a day of petroleum demand by 2030. However, the bank also believes that the regulations will not be adopted if a second Trump Administration comes to pass.

The rules would apply to vehicles sold between 2027 and 2032 with the Environmental Protection Agency estimating that the regulations would cut some 7 billion tons of carbon dioxide emissions. But the final rule is softer than an earlier version, which would have set a threshold of 124 grams. The final rule requires 144 grams per mile.

Meanwhile, EPA altered its estimate for the proportion of new car sales that are EVs--last May they projected a 67% share for EVs by 2032 but the final regs estimate 30%-56% in that time frame for purely battery-driven cars.

Citi had last year estimated that global demand displacement of EVs was around 300,000 b/d, with a target of 400,000 b/d in 2024 and 500,000 b/d in 2025. Most of the heavy lifting for the displacement will come from China, the European Union, and the U.S., and it will mostly impact gasoline consumption.

Overall, the EPA rules do put more downside on oil demand projections in the out years of the decade and into the 2030s. A base case held that EVs would hit 40%-45% of automobile sales in the U.S. or about 8.3-million EVs in 2030, up from a probable 2.1 million vehicles this year. Citi uses an axiom that maintains that one million EVs displace about 22,000 b/d of oil demand.

All of the number-crunching could be for naught if a second Trump Presidency is the outcome of the 2024 election. Citi notes that during the first Trump regime, the administration relaxed fuel economy standards and tailpipe emission regs. They note that he has vowed to make similar moves if he prevails in the November election.


This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.


-- Reporting by Tom Kloza, tkloza@opisnet.com; Editing by Steve Cronin, scronin@opisnet.com


(END) Dow Jones Newswires

03-28-24 1023ET