OPEC's cut in production, pandemic recovery seen as pushing gas to $3 a gallon
Press release from AAA:
Today’s national average price for a gallon of gasoline is $2.77, up 5 cents from last week. One year ago, the price was $2.39. The New York State average is $2.83 – up 5 cents from last week. A year ago, the NYS average was $2.57.
AAA Western and Central New York (AAA WCNY) reports the following averages:
- Batavia -- $2.76 (up 4 cents since last week)
- Buffalo -- $2.77 (up 4 cents since last week)
- Ithaca -- $2.80 (up 3 cents since last week)
- Rochester -- $2.81 (up 5 cents since last week)
- Rome -- $2.84 (up 4 cents since last week)
- Syracuse -- $2.80 (up 5 cents since last week)
- Watertown -- $2.86 (up 6 cents since last week)
Rising crude prices, tightening gas supplies, and increased gas demand have contributed to drivers seeing higher prices at the pump. According to the latest data from the Energy Information Administration (EIA), total domestic gas stocks decreased as demand is on the rise.
If these trends continue alongside higher crude prices, drivers can expect incremental price increases — of at least nickel — at their local gas stations in March. At the same time, motorists have yet to see any relief from gas price spikes following outages at Gulf Coast refineries.
Crude prices continue to push closer to $70 per barrel – they were in negative territory, under $0 per barrel, in April 2020. Last week, crude prices increased after the Organization of the Petroleum Exporting Countries (OPEC) decided with its allies, including Russia, to maintain existing crude production cuts through April. Additionally, Saudi Arabia — a member of OPEC — agreed to extend its voluntary production cut. Rising oil prices have a direct impact on pump prices.
"OPEC surprised oil markets last week by extending oil production cuts for another month, ignoring the resurgence in global demand as economies recover from COVID-19," said Patrick De Haan, head of petroleum analysis for GasBuddy. "Markets responded by pushing oil prices up some 12 percent.
"As a result, motorists should prepare for further gas price increases in the weeks and potentially months ahead, with a $3 per gallon national average potentially less than a month away. At the start of this year, it was somewhat outlandish to predict a $3 per gallon national average for the summer driving season, but thanks to the speed of recovery from the pandemic pushing demand higher and OPEC's reluctance to raise oil production, we're on the cusp of making that a reality.
"It's extremely frustrating as a consumer to feel helpless as prices soar and as millions remain unemployed, so the only advice I can offer consumers is prepare for further increases, and to mitigate rising prices, shop around for the low prices every time you need to refuel. I'm hopeful OPEC will see the error in their ways at next month's meeting, but with demand exceeding supply, the longer the imbalance continues, the longer it will take for any rise in oil production to offset it."