The national average price of gasoline has been moving higher over the last couple of weeks and is about to go even higher.
This week the group of major oil-producing nations, known as OPEC + because it includes non-OPEC members like Russia, announced member nations will cut oil production by 2 million barrels a day by the end of October. The cuts come at a time that the world is already experiencing tight supplies.
“As a result of OPEC's production cut, I estimate U.S. gas prices will be impacted by roughly 15 to 30 cents a gallon,” GasBuddy’s Patrick DeHaan posted on Twitter.
AAA’s daily fuel price survey shows the national average price of regular is $3.87 a gallon, an increase of three cents a gallon in one day. The price has risen eight cents in the last week and 11 cents a gallon over the last 30 days.
Motorists in California are paying an average of $6.42 a gallon, 24 cents a gallon more than seven days ago. However, DeHaan notes that spot prices in California have plunged in the last 24 hours and he predicts the price at the pump will give up a lot of that recent surge.
Prices will go up from here
Elsewhere around the country, prices are still climbing and may continue to do so once the oil market absorbs the OPEC + production cuts.
The last time oil-producing nations cut production was at the beginning of the COVID-19 pandemic when worldwide lockdowns reduced gasoline demand overnight. Since the pandemic has faded in most countries energy demand has risen and oil prices have bounced between $75 and $120 a barrel. U.S. energy officials say the cuts will hurt.
"It's not great news for American families and businesses who are already struggling with record inflation," American Exploration and Production Council CEO Anne Bradbury told FOX Business. "Oil, gas, refined products are all global commodities and all are priced on a global marketplace. When you're reducing supply from that global marketplace, the laws of supply and demand mean that prices are going to go up."
DeHaan’s prediction that the production cuts will add as much as 30 cents a gallon to the retail price of gas likely means the national average price of regular will be back above $4 a gallon by the end of the year.