Gasoline Prices in the United States are Likely to Remain Stable After OPEC Decides to Cut Output
The United States gasoline prices have climbed more than 3 percent as OPEC decided to cut output last week by 2 million barrels per day in November 2022, causing a flip in price trend that witnessed lower prices at the pump for weeks.
According to AAA, in the United States, the average national price for a gallon of gasoline on Monday was USD 3.919, up by last week's USD 3.799 and the previous month's USD 3.724.
The gas price hike happened just a few weeks in advance of the United States' November midterms, where Joe Biden, the President, continues to be challenged with the effects of untimely price rises at the pump.
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But according to Gas Buddy’s Patrick De Haan, OPEC’s decision, called short-sighted by the Biden Administration, is just one of the factors contributing to the rise in prices of gas. He added that although planned maintenance is a contributing factor, unexpected outages, especially in California and the Great Lakes regions, are the reasons behind the soaring prices.
Though, presently as the refinery issues in the Great Lakes and on the West Coast have started to get better, there will be a sign of a price drop at the pump, which was earlier expected as a result of the decision by OPEC.
While it is noticeable that some of these regions are witnessing a price rise as oil prices had expected this decision by OPEC, the prices of oil are now nearly USD 15/barrel elevated than the week before, which is compelling the costs to rise in areas of the Rockies, and southeast coast and northeast. The calculated increase is expected to be around 0.10 to 0.30 cents a gallon in the neighbourhood. Some regions have already experienced the rise and are expecting a different peak. On the other hand, the areas that have not yet witnessed a hike will likely bear the hardship of the significant increases.
The prices for the commodity increased furthermore on Wednesday, contributing to a streak of gains boosted by the turnabout in the prices of crude oil following a long period of fall during the summer.
On Wednesday, the price for the national average was at USD 3.83 per gallon, up by 16 cents compared to two weeks ago, when gas dipped after a continuous 98-day streak of declines. The pump price is still way lower than the high in June, which was just above USD 5/gallon; however, it is still higher than last year.
Gas prices have been a primary factor controlling recent high inflation. The dip during the summer came as a relief for consumers in America affected by inflation and also for the Federal Reserve in an attempt to control the soaring prices by raising the rate of interest.
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Gas and oil prices are interlinked because oil is among the crucial component of gasoline. The West Texas Intermediate crude oil price of the U.S. benchmark earned more than 10 percent since September when it fell by USD 80 per barrel for the first time since January. Crude oil exceeded USD 120/barrel after the Ukraine invasion by Russia.
According to Procurement Resource, the U.S. is witnessing a price hike due to OPEC's decision to raise gas prices despite the criticism by the Biden administration.