Are gas prices going to increase again? How OPEC and refinery issues affect local prices

After OPEC members met in Vienna in early October, the organization decided to decrease total production levels by two million barrels a day starting in November.

The decrease applies to both OPEC and OPEC+ member states. OPEC+ was formed in 2016 to assist a larger number of countries in increasing their influence over global energy prices.

In the report released by OPEC after they announced the decrease in production, the organization says that it is taking the step as it estimates that non-OPEC states plan to grow by around 2.1 million barrels a day. By cutting their own production, they can ensure that the price of oil remains high, which allows them to protect their own economies.

US dependence on OPEC oil has decreased significantly in recent years, but as the European Union and other governments have implemented bans on Russian oil, demand for other their crude oil has increased. Since Russia is a member of OPEC, there is an additional layer of complexity, and politicians are now accusing OPEC of taking sides with Russia by pushing up oil prices.

While much focus has been brought to the decision of OPEC to decrease production, politicians in the United States have little to say about how oil and gas countries at home have also opted to maintain the same levels of production while increasing exports. In December 2019, the US produced around 402,000,000 barrels of crude oil, and in July 2022, that figure was 365,785,000 barrels. Without a boost in production or a decrease in exports, consumers in the US will be forced to pay more to fill up their tanks and heat their homes.

How will OPEC’s decision impact gas prices in the US?

Already, some states like California are seeing gas prices tick up to their near-historic levels seen in June 2022.

This news comes as the US Energy Information Administration states that oil and gas companies are bringing historic profits while expenditure on capital that would allow them to increase production stands at historic lows. Instead, companies have opted to redirect their surpluses on “debt reduction, share repurchases, and dividends for shareholders.”

Corporate greed and the refusal to take steps to increase production, coupled with OPEC’s decision, means that drivers in the US could soon be paying more at the pump. Already, crude oil futures which provide an indication as to where the market is moving, are trending upward, and the reliance on the national strategic reserves is not a long-term solution to keep prices down.