After decreasing from July to mid-September, gas prices are on the rise again, most recently bolstered by OPEC+’s plan to reduce crude output.
Wednesday, the Saudi-led cartel decided to restrict output by 2 million barrels per day, the first significant drop in more than two years, in an effort to prop up falling oil prices. This action contradicts with U.S. and European efforts to reduce Russia’s earnings from the sale of crude oil.
Two million barrels per day represents approximately 2% of global oil production.
The price of Brent crude, the international benchmark, increased by more than 1.5% following the meeting, adding to the gains of the previous days. AAA reports that the national average price of a gallon of normal gasoline reached $3.86 on Thursday, following oil’s upward trend.
According to the travel club, this is a decrease from June’s high of $5.02, but an increase of 7 cents since Monday. Thursday, AAA issued a press statement stating that nationwide gasoline prices have increased due to high demand and limited supply. The demand for gas grew to 9.47 million barrels per day last week, up from 8.83 million barrels per day the week before, according to the Energy Information Administration.
According to AAA, pump prices on the West Coast have climbed due to continuing maintenance at about six refineries, which has severely limited the region’s supply. AAA projected respite in the coming days. According to the group, a devastating refinery fire in Toledo, Ohio has reduced supply in the Midwest.
“Gas prices are too high,” tweeted California Governor Gavin Newsom on Thursday, promoting the mailing of tax rebate checks to 23 million Californians this week.
Gas costs are excessive.
Beginning TONIGHT, 23 million Californians will receive up to $1,000.
This will be the nation’s greatest state tax rebate.
6.10.2022 — Gavin Newsom (@GavinNewsom)
Many petrol pumps currently displaying prices below $3 per gallon will “disappear in the next weeks, mostly due to OPEC’s decision to decrease oil supply,” GasBuddy analyst Patrick De Haan tweeted on Thursday.
In the coming weeks, many gas prices below $3 per gallon will disappear, primarily due to OPEC’s plan to reduce oil supply.
October 6, 2022 — Patrick De Haan (@GasBuddyGuy)
Prior to recent price increases, U.S. motorists were experiencing less pain at the pump, and a jump in fuel prices before the midterm elections on November 8 could cause the White House to consider its options.
Natasha Kaneva and Prateek Kedia, commodity analysts at J.P. Morgan Securities, stated in emailed research, “A policy response from the Biden administration is undoubtedly soon.”
Analysts predict that the response will involve boosting shipments from the Strategic Fuel Reserve, the nation’s emergency supply of petroleum. They said that a rise in petrol prices before the midterm elections on November 8 could prompt the White House to consider additional measures.
This report was compiled in part by the Associated Press.