For two decades Big Oil bet on one buyer to soak up all the extra crude and gasoline: China. That bet is now going sideways. China’s oil demand growth is stalling out, and the reason isn’t a slow economy. It’s electric cars, a wall of them, plus trucks running on LNG instead of diesel. Gasoline demand there may have already peaked. The Wall Street Journal lays out how the dream customer turned into the problem.
Here’s the part that stings for the majors. They built refineries, signed long contracts, and planned decades of shipments around Chinese appetite that just keeps climbing. Now more than half of new cars sold in China plug in. The forecasts that had China guzzling more oil every year through the 2030s? Being torn up. The oil was always going to sell itself, right up until it wasn’t.
Big Oil bet its next 20 years on China buying more gasoline every year. China stopped, and now sells electric cars at a clip that has flattened its oil demand ahead of schedule. That miss shows up in your stocks: Exxon, Shell, and the rest priced in decades of Chinese growth, so if you own energy funds or a broad index, part of the story baked into those shares is already wrong. Watch how much the majors keep pouring into new supply versus handing cash back to shareholders. The ones who read the room early are the ones worth owning.
For twenty years the pitch on China was the same. A billion new drivers, a billion new gas tanks, sell them the fuel and get rich. Nobody drew the other branch on the tree: the customer grows up, builds his own supply chain, and starts eating your lunch in the export markets you thought were yours. China now leads the world in EVs and refining capacity, and Big Oil is watching its dream customer turn into a competitor. That “bet on the emerging middle class” story sells a lot of fund shares. It just leaves out the part where the emerging market would rather become the seller than stay the buyer.
Sources: The Wall Street Journal
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