Today’s national average for a gallon of regular gasoline is $2.212 according to AAA. That happens to be the same price as yesterday, however, gas prices have risen about 2.5 ¢ over last week, and 4.0 ¢ since last month.
While these minor increases won’t break the bank, the up-tick in prices over the past month more than likely are indicative of the recent agreement by members of the Organization of Petroleum Exporting Countries (OPEC) to reduce output by 1.2 million barrels a day by January 2017 (see Say It Ain’t So? OPEC Reaches Agreement to Curtail Production).
Will gas price rise higher? My gut feeling is yes, but how much is the question? The newest unknown to this gas pricing equation is how the market will respond to news of the latest production-cut agreement from a number of non-OPEC oil-producing countries.
Reuters is reporting that this past Saturday, these non-OPEC producers agreed to scale back output by 558,000 bpd. Also, Russia, which had been expected to increase production in 2017, agreed to cut 300,000 barrels a day, accounting for about half of the total production-cut pledge made Saturday by a group of producing nations that included Mexico, Azerbaijan, Bahrain, Oman and other small producers.
Combined with OPEC’s 1.2 million barrel cut set to start next month, the crude oil supply is expected to tighten by 1.8 million barrels a day.
Going home for the holidays in 2016 will definitely cost you more. Today’s average of $2.12 per gallon for regular gasoline is 20 ¢ higher than a year ago.
Merry Christmas! Best wishes for the holidays and safe traveling for everyone!