OPEC Sees U.S. Motorists as Their Ally

An IEA report suggests that oil prices have bottomed-out, are now on the rebound, and that demand for OPEC's oil will start rising next year. OPEC predicts that U.S. oil consumption will increase after years of decline, thanks to U.S. motorists.

2 minute read

February 12, 2015, 5:00 AM PST

By Irvin Dawid


"OPEC also sees American motorists as an ally," write Sarah Kent and Benoît Faucon of The Wall Street Journal. "The cartel increased its forecast for North American oil consumption by 15,000 barrels a day, a shift that translates into an increase of 20,000 barrels a day in forecast demand growth world-wide."

“Gasoline, in particular, remains a key driver behind the growth in U.S. oil demand, largely a result of lower oil prices,” OPEC said. Overall, oil consumption is expected to increase by 1.17 million barrels a day to 92.32 million barrels a day.

The additional oil demand from the U.S. is a cherry on top of their main goal—reducing global oil production, particularly from America's fracking wells, which was one of the findings of the Feb. 10 International Energy Agency (IEA) report:

A wave of spending cuts by oil producers and a sharp decline in the number of rigs drilling for crude in the U.S. likely will slow the nation’s oil-output growth, spurring a rebound in prices.

"The conclusions drawn from the IEA and the OPEC reports indicate that OPEC’s strategy to protect market share by keeping the spigots open is showing early signs of success," write Kent and Faucon. "Led by Saudi Arabia, OPEC in November surprised markets when it maintained its production levels, a move that some observers said was aimed at weakening U.S. shale-oil producers."

However, not everyone is aboard the "glut is abating" boat, even if the IEA report gives it credibility. Steve LeVine, Quartz's Washington correspondent, reports that two major investment banks believe that prices have not bottomed, one believing that prices could drop to the $20 per barrel level, the other saying "the price will average $40 to $50 a barrel for the year as a whole."

Either way, OPEC wins. The longer American motorists enjoy cheap gas prices, the longer the U.S. is hooked on cheap oil and push up U.S. oil demand, making them OPEC's best friend.

If there's one lesson to be learned here, it's that if U.S. leaders want to achieve energy security, or as some call it, energy independence, they will need to do more than just boost production, now shown rather ironically to be vulnerable to OPEC's pricing tactics; consumption needs to be looked at as well.

Correspondent's note: Subscriber-only content to Wall Street Journal article should be available to non-subscribers for up to seven days after Feb. 10.

Monday, February 9, 2015 in OPEC Says U.S. Motorists

Sweeping view of Portland, Oregon with Mt. Hood in background against sunset sky.

Oregon Passes Exemption to Urban Growth Boundary

Cities have a one-time chance to acquire new land for development in a bid to increase housing supply and affordability.

March 12, 2024 - Housing Wire

Aerial view of green roofs with plants in Sydney, Australia.

Where Urban Design Is Headed in 2024

A forecast of likely trends in urban design and architecture.

March 10, 2024 - Daily Journal of Commerce

Cobblestone street with streetcar line, row of vintage streetlights on left, and colorful restaurant and shop awnings on right on River Street in Savannah, Georgia.

Savannah: A City of Planning Contrasts

From a human-scales, plaza-anchored grid to suburban sprawl, the oldest planned city in the United States has seen wildly different development patterns.

March 12, 2024 - Strong Towns

Aerial View of Chuckanut Drive and the Blanchard Bridge in the Skagit Valley.

Washington Tribes Receive Resilience Funding

The 28 grants support projects including relocation efforts as coastal communities face the growing impacts of climate change.

March 18 - The Seattle Times

Historic buildings in downtown Los Angeles with large "Pan American Lofts" sign on side of building.

Adaptive Reuse Bills Introduced in California Assembly

The legislation would expand eligibility for economic incentives and let cities loosen regulations to allow for more building conversions.

March 18 - Beverly Press

View from above of swan-shaped paddleboats with lights on around artesian fountain in Echo Park Lake with downtown Los Angeles skylien in background at twilight.

LA's Top Parks, Ranked

TimeOut just released its list of the top 26 parks in the L.A. area, which is home to some of the best green spaces around.

March 18 - TimeOut

News from HUD User

HUD's Office of Policy Development and Research

Call for Speakers

Mpact Transit + Community

New Updates on PD&R Edge

HUD's Office of Policy Development and Research

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.