demand destruction – As gasoline in the U.S. passed $4.50 a gallon and drivers paid $45 billion more for gasoline and diesel since the Iran war began in late February, many Americans cut back on driving and shift toward public transit, biking, carpooling, and remote work. Economis
When the average price of gasoline in the United States pushed above $4.50 a gallon—about a 40 percent rise since the Iran war began in late February—commuting became something people dreaded.
By midstream, the consequences were already visible in everyday decisions. U.S. drivers were paying $45 billion more for gasoline and diesel compared with last year. In a survey in late April from ABC News, the Washington Post, and Ipsos, 44 percent of U.S. adults said they’d cut back on driving because of high gas prices.
On some mornings, that change looked like people choosing the bus or the train. Cities across the country saw rising numbers of public-transit riders, stretching from Cincinnati to Los Angeles. Railroads like Amtrak reported more riders than usual. Some people who might have stayed inside their cars have been swapping car trips for bikes and scooters.
Others are avoiding total abandonment of their vehicles—and making their lives fit around the new fuel math. Much of the country is built around highways and suburbs, leaving fewer alternatives for many commuters. So the adaptations have been partial: carpooling, consolidating errands, and working remotely more often. Sales of used electric vehicles and hybrid cars have also grown substantially over the past couple of months.
Whether any of this sticks is the question hovering over the whole story. Some experts say the stakes go beyond individual habits—because the crisis is hitting where future oil demand was expected to grow fastest: Asia.
The region was projected to account for nearly all the increase in oil and gas use over the coming decades. but the current disruption is forcing a rethink. Daan Walter. who leads strategy research on the future of energy for the think tank Ember. warned that if the shift holds. the world may be staring at a lasting break from fossil-fuel growth.
“If Asia turns around and says. ‘No. we’re not going to grow with fossil fuels. we are going to grow with electrotech. ’ that means fossil fuels will peak. and will peak sooner than we think. ” Walter said. “It’s very likely that if this crisis continues to be as bad as it is. and we see this conversion happening. that we’re currently living in the peak year of oil. and that demand will just never come back to the level that it was just before Hormuz closed.”.
The Strait of Hormuz is central to that risk calculation. With roughly 20 percent of the world’s oil shipments choked off. households and industries have found ways to use less of it. That can create what economists call “demand destruction” for oil—an outcome that means the world simply won’t need as much as it used to.
The phenomenon is already appearing in the data. The International Energy Agency said last week that demand for oil is being destroyed. forecasting a contraction of 420. 000 barrels a day this year. The idea can sound like a dramatic label for a short-term dip. But Kenneth Gillingham. a professor of environmental and energy economics at Yale University. said the term fits best when it reflects something deeper.
“To me, the term demand destruction really only makes sense if you’re talking about it as a longer-term thing. Like, it’s truly destroyed the source of demand,” Gillingham said.
What’s different now, many analysts argue, is how concentrated the knock-on effects have been. The destruction in global oil demand has been concentrated in Asia rather than in the U.S. where overall wealth makes it easier for people to keep paying for fuel even as it strains the budgets of low- and middle-income Americans.
Even in places known for producing petroleum-intensive products, the cutback is showing up. Factories in Japan are producing fewer petrochemical products—demand for naphtha. used to make plastics and chemicals. fell by a quarter year-over-year—amplifying Japan’s “long-term declining trend” in oil demand. according to the International Energy Agency. The agency also said gasoline demand in South Korea fell by about 5 percent as prices rose at the pump. suggesting behavior changes are contributing. not just industrial planning.
As the Middle East crisis deepened, South Korean President Lee Jae Myung called for a sharp shift to renewable energy, saying, “Our future will be at serious risk if we continue to rely on fossil fuels.”
Oil demand is also shrinking in institutional ways. Countries and companies have introduced measures to reduce commuting in response to the crisis: Pakistan, the Philippines, and Sri Lanka have all introduced four-day work weeks to encourage fewer commutes.
But the hardest part to measure is permanence. President Donald Trump has promised that oil prices will “drop like a rock” once the war in Iran ends. Still. even if shipping through the Strait of Hormuz resumes. oil supplies could remain tight for months as facilities are repaired and wells get restarted.
This isn’t happening in isolation. The Iran war is also the second oil shock in recent years, following Russia’s invasion of Ukraine in 2022. Experts say this pattern makes prolonged demand decline more likely.
“If prices are low for a very, very long time, and then you have a shock, it’s easy to write it off as not a big deal, not going to happen again. But if you continue getting shocks, then you’re like, ‘Maybe I should really start thinking about making some changes,’” Gillingham said.
Ember’s report, co-written by Walter, argues the “twin fossil shock” of the 2020s opens up new political possibilities. The authors compare today’s disruption to the double oil shocks of the 1970s. when investments surged in energy efficiency and nuclear power—but they also point to a crucial difference: the availability of scalable alternatives.
“The parallels with the 1970s oil shocks are striking. But so too is the difference,” the authors wrote. “For the first time, there are scalable, cost-competitive alternatives. Solar, wind, batteries, EVs, and other electrotech offer a permanent route out of fossil dependence.”
The report predicts Asia will fast-track electrification, switching to EVs and pushing liquefied natural gas out of power generation. It points to an early sign: after the start of the bombing campaign in March, China’s exports of solar, batteries, and electric vehicles surged.
Walter described what he sees as the psychological shift that repeated shocks can trigger.
“It really shakes countries and companies around the world out of this complacency of thinking that there is a path back to a normal stable fossil system,” he said. “Import dependency is just incredibly risky at the moment, and the second crisis kind of confirms that.”
Even if people return to their previous routines when the immediate pain fades, the crisis may still have planted new habits. Susan Handy, a professor of environmental science and policy at the University of California, Davis, said shocks can be unusually effective at breaking inertia.
“A shock like the big increase in gas prices. or an earthquake that closes a freeway. is really helpful in getting people to change behavior. ” Handy said. “It is really hard to get people to change behavior without those kinds of shocks — not that we want these things to happen. but it is what pushes behavior change.”.
Handy said that when a bridge that collapsed reopens, most people go back to driving—but some will keep biking anyway.
What determines whether that kind of change survives is what people come to like. Handy said people may discover they enjoy riding a bike around town or reading on the bus more than sitting behind the wheel in traffic once they’ve had a reason to try those alternatives.
She also pointed to another lever: rising prices can nudge people toward energy-efficient vehicles or appliances, and those purchases can lock in lower fuel usage over time.
For Americans, though, the pull of convenience is still strong. Gillingham cautioned that oil prices have risen and fallen many times in U.S. history.
“We’ve seen oil prices go up and down many, many times in our history, even in recent history,” he said. “Generally, those shorter-term behaviors tend to bounce back to where they were before.”
Still, the global picture looks less stable than it did before. With a second oil crisis hitting within half a decade and alternatives to fossil fuels becoming cheaper and more widespread. experts say the odds favor more lasting shifts—an acceleration of oil demand’s decline and a faster move toward cleaner replacements.
As Rebecca Solnit wrote in a recent newsletter: “What if in a decade or a century people remember this as the point when the world really turned away from this filthy, corrupting, unreliable, destructive resource?”
Iran war oil demand demand destruction Strait of Hormuz gasoline prices electric vehicles electrification Ember International Energy Agency Daan Walter Kenneth Gillingham renewable energy Amtrak public transit