Even before the OPEC+ action on Wednesday to cut oil production, US gas prices were on track to rise. There will likely be more price increases at the pump.
Gas prices rose nearly 3 cents a gallon in the daily AAA reading on Wednesday, to $3.83 a gallon, the largest one-day rise in nearly four months.
The 99-day price drop streak From mid-June to September 20 may become a distant memory, although today’s prices are still well below the June record of just over $5.03 a gallon. Gas prices have increased every day but one day since, and are now up 16 cents a gallon, or 4%, since hitting their lowest level two weeks ago at $3.67 a gallon.
For the most part, price increases have been slow and gradual, but that may be about to change. OPEC+, which includes not only countries in the oil cartel but other major oil producers such as Russia, agreed on Wednesday to reduce oil production About 2 million barrels per day.
Oil futures rose about 2% on the news, and gasoline futures rose slightly on the back of the OPEC move. Gasoline futures are up about 20 cents a gallon since the slide in gasoline prices ended last month, indicating the potential for higher prices in the future.
Oil and gasoline futures have been falling since mid-June due to growing concerns about a… Possible stagnation Decreased demand for gasoline and oil, among other factors.
Tom Cluza, global head of energy analysis at OPIS, which tracks AAA gasoline prices, said the recent increases were caused by the unusually large number of US refineries that have closed for maintenance. He said nearly 18% of the country’s refining capacity is now idle.
“A lot of them were put off in the spring because they were making a lot of money,” he said. “The margin for error in US refining capacity is so small right now that you can’t lose any capacity without affecting prices.”
This is usually the time of year when gas prices fall as regulations requiring cleaner but more expensive gas to combat smog end in most parts of the country. The end of the summer driving season also lowers demand, which in turn leads to lower prices.
Unfortunately, the filter capacity is reduced “It means gas prices won’t go down as much as I thought,” said veteran oil analyst Andy Lebow. “In fact, they might Drift upwards.”
Another factor that has helped bring prices down in recent months: the release of about 1 million barrels of oil per day from the country. Strategic Petroleum Reservewhich is due to expire on November 1.
“No one really knows what happens when SPR sales end,” Kloza said.
The only thing that could bring prices down: California, which usually keeps its rules requiring summer gasoline blends through November, raised the demand early last week. That could lower the national average price, even if it only affects California gasoline. The state accounts for about 9% of US gasoline consumption, so the change can affect the national average even if prices don’t move elsewhere. The average price is $5.52 per gallon, which is the highest in the country.
I don’t think we will see big moves in national prices. “Even if we see California prices come back in the package,” Kloza said.
The typical American household buys about 90 gallons of gas a month, so the drop from $5.03 a gallon to $3.67 a gallon late last month represents a savings of about $120 a month. By contrast, a 16-cent hike from that low would have cost a household about $14.
The Biden administration’s concern is that rising gas prices are bringing renewed focus into the minds of voters.
For this reason, members of the Biden administration I lobbied hard to convince OPEC Countries should not cut production and possibly raise prices before the midterm vote. These efforts failed.
– CNN’s Alex Marquardt, Natasha Bertrand and Phil Mattingly contributed to this report
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