Update: The OPEC+ alliance of oil-exporting countries voted today to cut oil production by a larger-than-expected 2 million barrels per day starting in November. Changes in the price of oil usually show up in the price of gasoline in about a week.
As a result of OPEC's production cut, I estimate U.S. #gasprices will be impacted by roughly 15-30c/gal
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) October 5, 2022
The average price of a gallon of gas in America this morning is $3.81, according to AAA. That’s up 5 cents in a week — not a meteoric rise, but news after pump prices spent more than three months declining. However, a threat on the horizon could speed up their climb.
AAA explains, “Tight supply and increased demand as more drivers fuel up are the main culprits.”
Related:
- What Rising Gas Prices Actually Cost You
- Gas Prices: How Hypermiling Saves You Money
- How to Get Better Fuel Economy in Your Existing Car
We’re Driving More. That’s Unusual in October
According to the U.S. Energy Information Administration, Americans used 9.4 million barrels of gasoline per day the week ending September 24 (the most recent week for which data are available). That’s up from 8.8 million the week before.
Because data lag by several weeks, the increase doesn’t yet reflect Southeasterners fleeing the approach of Hurricane Ian. When next week’s numbers are available, they’ll likely show another jump.
Gasoline demand typically drops in the fall, so most refineries schedule annual maintenance for October. AAA spokesperson Andrew Gross explains, “At least six California refineries are undergoing maintenance, and there is limited pipeline supply to the West Coast from locations east of the Rockies.”
But a bigger threat could be coming.
Oil Producers May Limit Supply
Bloomberg explains, “the OPEC+ alliance of oil-producing countries are poised to cut production by more than 1 million barrels a day to bolster global oil prices. A decision won’t be made until Wednesday.”
Still, the belief that OPEC+ will cut oil supplies has already caused a spike of more than 8% in oil prices since the weekend.
A change in oil prices usually takes about a week to reach the meter at the gas pump.
California Trying Something New
California officials are trying to head off a spike by allowing less-expensive winter-blended fuel to be sold a month before schedule. The rest of the country made the switch in mid-September, but California usually makes the switch on Nov. 1. The price at the pump can fall as much as 30 cents per gallon as gas stations switch to winter gasoline. It also declines with the temperature as many drivers stay closer to home.
