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Even higher gasoline prices are coming, industry analysts predict

A standoff between oil producers is sending crude oil prices soaring

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Photo (c) bigtunaonline - Getty Images
Gasoline prices have been steadily rising since the effects of the pandemic began to subside, and industry analysts say prices at the pump are poised to move even higher in the days ahead.

The catalyst for the move is the meeting of oil-producing nations this week -- a group known as OPEC Plus. The members met to agree on a plan to provide the world with more oil. Since they couldn’t agree, the meeting ended with no action and no plans for a future meeting.

OPEC Plus cut oil production last year as the coronavirus (COVID-19) shut down economies around the world, leading to a drop in gasoline demand. At one point in May 2020, the price of oil was a negative number as producers paid their customers to take the oil off their hands.

Price increases may only be beginning

Now that the U.S. economy is reopening, there is a sharp rise in demand for gasoline. Highways were jammed over the July 4th weekend as Americans packed their bags and hit the road. They didn’t seem to mind paying more for fuel.

But analysts expect consumers will pay even more if OPEC Plus doesn’t quickly shift from “pandemic production” to “growing economy” production. The national average price of gas is rising by about a penny per day, but prices are rising faster in some parts of the country.

“Los Angeles #gasprices are just a penny away from reaching the highest level in nine years.... $4.33/gal is the magic number,” GasBuddy’s Patrick DeHaan wrote in a Tweet Tuesday.

As a result of the stalemate among oil producers, crude oil prices are at a six-year high. Those prices are rising because of uncertainty about how much oil is going to be available as economies around the world reopen.

In an interview with Fox Business, PRICE Futures Group senior analyst Phil Flynn said the impasse is likely to hit consumers’ pocketbooks. Without an increase in supply, he predicts that prices at the pump could hit $4 a gallon.

"If we don't get the production from OPEC, it could mean prices are going to go sharply higher," he said.

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