OPEC's Biggest Threat: American Drivers?

OPEC, the multi-nation group of some of the world's largest and most powerful oil countries, should be worried that President Trump's America-first and energy friendly policies will prove to be a formidable competitor in the global oil market. But there's another threat to OPEC's dominance coming from America: fuel-conscious drivers.

According to a Bloomberg report, OPEC needs to see strong demand from motorists across the world, especially in the U.S., which happens to be the world's largest consumer of gasoline. The problem is that gasoline consumption in 2017 is lower by 1.7 percent from the same period in 2016. The average price at the pump is also 30 percent higher than it was in the prior year.

Bloomberg noted that fuel-conscious drivers are not only using less fuel, but this trend isn't set to reverse in the near-term.

Fuel Efficient Cars

Even consumers who aren't "penny-pinching" at the pump are using less gas by default as new cars are more efficient now than they were even a year ago. In fact, 2015 models of fleet of passenger cars and light trucks achieved an average record of 24.8 miles per gallon, up from 2014's models, which boasted on average 24.3 miles per gallon.

The Environmental Protection Agency projected the fuel efficiency of new vehicles on average are projected to rise even more to 25.6 miles per gallon in 2016.

Bottom line, Kyle Cooper, director of research with IAF Advisors, told Bloomberg 2017 is off to a "disappointing" start for those who are bullish on petroleum demand.

"If you're a bull, you're hoping for OPEC's success cutting supply because the other factors aren't going your way," he added.

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