Buckle Up: Gas Prices Likely to Rise Even More as OPEC+ Discusses ‘Historic’ Cut in Production
BY CHRIS QUEEN
Republished below in full unedited for informational, educational, & research purposes.
After more than a year of rising gas prices, it was nice to see them go down a bit over the summer. It wasn’t enough, but every little bit helped. All the while, the Biden administration crowed about gas prices as though a slight drop after sharp rises was all part of the plan.
Many of us believed that prices would trend back upward eventually and recent weeks have proven that notion correct, as oil companies started preparing for the switch to winter gas formulas and Hurricane Ian bore down on Florida.
And now it looks like even higher gas prices are in the works. OPEC+, the coalition of the traditional OPEC nations and other oil-producing nations, is meeting in Vienna this week to discuss production policy. CNBC reports that these oil producers are “reportedly considering their largest output cut since the start of the coronavirus pandemic this week, a historic move that energy analysts say could push oil prices back toward triple digits.”
It’s the first meeting of OPEC+ since 2020, so experts believe that this summit is intended to lead to big moves like a cut in supply.
“The OPEC ministers are not going to come to Austria for the first time in two years to do nothing. So there’s going to be a cut of some historic kind,” Dan Pickering, CIO of Pickering Energy Partners, told CNBC.
This move could mean a production cut of a million barrels per day, although Pickering expects the cut to be around half a million. And since the U.S. is no longer a net energy exporter thanks to the Biden administration, that can only mean that prices at the pump will rise.
Related: Biden Washes His Hands of Gas Prices Now That They’re Going Back Up
Because the OPEC+ countries are having trouble reaching their production targets as it is, some analysts think that the potential cuts in output are necessary and won’t affect prices all that much.
“It is probably also the reason why they are meeting face-to-face this week in Vienna because it is potentially a highly controversial decision that they may take. But I think the impact is probably going to be less than what the market is looking for,” Ole Hansen of Saxo Bank told CNBC.
However, other factors could push gas prices up.
“We’re going to see more support from the supply side if sanctions kick in from Europe towards the end of the year [and] as the U.S. [Strategic Petroleum Reserve] begins to shut down its deliveries in November,” Pickering told CNBC.
Regardless of what OPEC+ decides to do, Pickering believes that we’ll be seeing gas prices go up in the coming weeks and months.
“OPEC is no particular friend of oil price softness, gasoline prices going down … despite what people will say, we’re gonna see some pretty sticky energy inflation as we move forward over the next couple of years,” he said.
Of course, we know how the Biden administration will respond to rising gas prices. We’ll hear more flippant calls that the solution to everything is to buy expensive electric vehicles. The White House will double down on the green, anti-fossil fuel rhetoric. All the while, the pinch of higher gas prices will hurt Americans, especially those in rural or lower-income areas.
If there’s an upside to rising gas prices, it’s that they could come back to haunt the Democrats for years to come.