It’s just one in a laundry list of factors, but more fuel-efficient cars could make a difference in lowering oil prices dramatically to half their present levels, plunging to $50 a barrel by the end of the year. That’s what Gulf Oil CEO Joe Petrowski is predicting in a new interview on CNBC‘s Squawk Box, though he is quick to point out that a halving of oil prices doesn’t necessarily translate to a halving of fuel prices. And, as CNNreports, lower oil prices could mean protests in oil-producing OPEC nations.
Petrowski highlights the fact that North America is “producing record amounts of oil and natural gas,” adding that OPEC suppliers are up as well. Additionally, demand from countries like China has ebbed, while the utilities sector has also cut its use of oil. Petrowski estimates that a shortage of pipelines and the need to transport fuel via rail and truck adds about 40 cents a gallon to gas prices. CNN explains that more domestic energy production (and, again, dropping demand in China) means that “demand for OPEC oil may fall by a million barrels a day over the next three years.” Given that Saudi Arabia and other OPEC nations rely on high oil prices to fund domestic spending, lower crude prices could cause instability around the world, from Iran to Venezuela to Russia.
Lower oil prices don’t influence gas prices directly, but, they will have an impact on gas prices – and thus the car market in the US. Right now, the price of regular gas in the States has climbed about 15 cents in the past week to $3.66 a gallon, according to AAA. Prices are about even with a month ago, but have risen about seven percent in the past year. For more, check out a video of Petrowski’s interview on CNBC by scrolling below.