Maybe we don't need as much oil

The big picture: Higher gas prices driven by the war are accelerating a global transition to electric vehicles — especially in China and Europe — and are helping stave off the deeper economic pain that past energy crises have created.

• "History suggests that past oil shocks often left lasting declines in gasoline demand, and this episode may prove no different," commodity analysts at JPMorgan recently wrote.

The latest: After falling on reports that the U.S. had negotiated a deal to end the war, oil prices rose sharply Monday as those hopes evaporated.

Zoom in: Globally, retail prices for gas are up 28% from this time last year, and up 33% for diesel, Goldman Sachs analysts said in a note Sunday night.

• That has decreased demand for gasoline and diesel, as well as for petrochemicals and jet fuel.

The intrigue: Such "demand destruction," as economists like to call it, hasn't brought an anticipated economic slowdown, analysts at both Goldman Sachs and JPMorgan noted.

• That's partly because consumers have options: People are switching to electric vehicles in Europe and, especially, in China.
• In the rest of Asia, demand has fallen as governments encourage more remote work, as well.
• The rise of EVs and work-from-home technology has "increased switching opportunities," Goldman analysts wrote.

By the numbers: In March, "around 30 countries" had record-breaking monthly EV sales, per the IEA.

What they're saying: "We spent last week in China, and the most striking takeaway from our meetings was not simply that oil demand has fallen," JPMorgan commodity analysts said in a research note last week. "It was that it may have dropped by as much as 9% ... abruptly, unexpectedly and with remarkably little visible disruption."

• The oil shock in Europe, they wrote, has been "oddly" more manageable than in 2022 — helped by EV adoption and surges in solar and wind power.

For example: The Chinese government estimates that during a five-day holiday in May, EVs accounted for nearly a quarter of all vehicles on the road — up 33% from last year.

• Demand for jet fuel in China is also down, as more Chinese people are traveling by high-speed rail domestically.

Zoom out: Almost half the oil used today is for road transport, climate journalist Bill Spindle noted on Substack.

• If the war drags on, the incentive to switch to EVs will only grow, he argued.

Reality check: Certainly, the oil shock hasn't been painless. Southeast Asia, in particular, has been hammered by rising prices.

Flashback: The modern-day energy system was built following the 1973 oil crisis — countries and businesses worked to become more fuel efficient.

• In the U.S., it led to the creation of the Strategic Petroleum Reserve, the founding of the Department of Energy and fuel economy standards.
• The national speed limit was established as a way to reduce gas usage.

What to watch: This time could spark an even more radical shift.

• Put more wonkishly: The war is leading to "the steady decoupling of economic activity from oil consumption itself," JPM analysts wrote.

Between the lines: Under President Trump, the U.S. has backed away from efforts to push toward EVs and renewable energy — and could be at a disadvantage as these changes accelerate.

Thought bubble via Axios national energy correspondent Amy Harder: One reason the decoupling is happening is because we've already gone through all the lowest-hanging fruit and taken oil out of the economy where possible.

• If there is a move away from oil this time, it will have to be more radical.