The OPEC production deal has sent gasoline prices on an upward spike
By NACS Online
After relatively low gasoline prices across the country, pump prices are increasing as the cost of oil rises after the Organization of Petroleum Exporting Countries (OPEC) decided to keep production at its current levels, UPI reports. OPEC had previously agreed on its first output cut since 2008 at its recent meeting in Vienna.
AAA shows the national average cost for a gallon of regular unleaded gasoline hovered at $2.18 yesterday—a nickel increase from last week and 14 cents above the same date in 2015.
“Markets reacted quickly to the production agreement with crude oil gaining 12% and leading to increased retail prices [for gasoline],” AAA reported.
Regionally, trends showed a mixed bag for gasoline prices. In the West Coast region, pump prices actually declined, with California’s cost per gallon at $2.66—a penny lower than a week ago and 3 cents below the same time last year. The Great Lakes states, which usually have the most movement for pump prices, lived up to their reputation by having the biggest price jumps in the United States.
“That is despite adequate supply in the region, which is likely to get a boost this week,” according to AAA. The biggest BP refinery in that region is finally running at full capacity after suffering many disruptions this year.
Usually gasoline prices drop this time of year, and the national average price is 4 cents below a month ago. Patrick DeHaan, a senior analyst at GasBuddy.com, said that pump prices will probably have more movement come January when OPEC’s agreement goes into effect. “For now, oil markets have bid up oil prices in a fury believing the agreement, which comes into force in January, is exactly what’s needed to balance supply and demand,” he said. “I, however, believe this rally represents a balloon that’s filled with too much air and risks a correction (popping the balloon) that may be seen in due time.”